Exhibit (a)(1)(viii)
AMENDED AND RESTATED OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
FOX & HOUND RESTAURANT GROUP
AT
$16.30 NET PER SHARE
BY
NPSP ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
F&H ACQUISITION CORP.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, FEBRUARY 16, 2006, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS OF
JANUARY 30, 2006 (THE "MERGER AGREEMENT"), BY AND AMONG F&H ACQUISITION CORP., A
DELAWARE CORPORATION ("F&H ACQUISITION" OR "PARENT"), NPSP ACQUISITION CORP., A
DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF PARENT ("NPSP ACQUISITION"
OR THE "PURCHASER"), AND FOX & HOUND RESTAURANT GROUP, A DELAWARE CORPORATION
("FOX & HOUND" OR THE "COMPANY"), AND FOR LIMITED PURPOSES, NEWCASTLE PARTNERS,
L.P. ("NEWCASTLE") AND STEEL PARTNERS II, L.P. ("STEEL").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER A NUMBER OF SHARES
OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"), OF FOX & HOUND WHICH,
TOGETHER WITH THE SHARES THEN OWNED BY F&H ACQUISITION AND ITS SUBSIDIARIES
(INCLUDING NPSP ACQUISITION), REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER
OF SHARES OUTSTANDING ON A FULLY DILUTED BASIS AND (II) EXPIRATION OR
TERMINATION OF THE APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976.
THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY (THE "SPECIAL
COMMITTEE") HAS UNANIMOUSLY RECOMMENDED TO THE BOARD OF DIRECTORS OF THE COMPANY
THAT THE BOARD APPROVE, AND THE BOARD HAS UNANIMOUSLY APPROVED AND ADOPTED THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT,
INCLUDING THE OFFER AND THE MERGER, AND IT HAS ALSO UNANIMOUSLY: (I) DETERMINED
THAT THE TERMS OF THE OFFER, THE MERGER AND THE MERGER AGREEMENT ARE FAIR TO AND
IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND (II) RESOLVED
TO RECOMMEND THAT HOLDERS OF ALL ISSUED AND OUTSTANDING SHARES PURSUANT
TO THE OFFER ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE COMPANY HAS DETERMINED THAT THE APPROVAL OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND
THE MERGER, IS SUFFICIENT TO RENDER INAPPLICABLE TO THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER,
THE RESTRICTION AGAINST THE PARTIES HERETO ENGAGING IN ANY BUSINESS COMBINATION
AS SET FORTH IN SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW.
IMPORTANT
Any stockholder of the Company desiring to tender Shares in the Offer
should either (i) 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 certificates
representing tendered Shares and all other required documents to American Stock
Transfer & Trust Company, the Depositary for the Offer, or tender such Shares
pursuant to the procedure for book-entry transfer set forth in "The
Offer--Section 3--Book-Entry Delivery" or (ii) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Stockholders whose Shares are registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact such person if they desire to tender their Shares.
Any 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 pursuant to the guaranteed delivery procedure set forth in "The
Offer--Section 3--Guaranteed Delivery".
Questions and requests for assistance may be directed to the
Information Agent at its address and telephone number set forth on the back
cover of this Offer to Purchase. Additional copies of this Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other related
materials may be obtained from the Information Agent or from brokers, dealers,
commercial banks and trust companies.
THIS AMENDED AND RESTATED OFFER TO PURCHASE AND THE RELATED LETTER OF
TRANSMITTAL CONTAIN IMPORTANT INFORMATION, AND YOU SHOULD CAREFULLY READ BOTH IN
THEIR ENTIRETY BEFORE MAKING A DECISION WITH RESPECT TO THE OFFER.
February 3, 2006
ii
TABLE OF CONTENTS
Page
----
Summary Term Sheet............................................................ 1
Introduction.................................................................. 6
The Offer..................................................................... 7
1. Terms of the Offer.................................................... 7
2. Acceptance for Payment and Payment.................................... 9
3. Procedure for Tendering Shares........................................ 9
4. Withdrawal Rights.....................................................11
5. Material Tax Considerations...........................................12
6. Price Range of Shares; Dividends......................................12
7. Possible Effects of the Offer on the Market for the Shares;
Stock Exchange Listing; Registration under the Exchange Act...........13
8. Certain Information Concerning the Company............................14
9. Certain Information Concerning the Purchaser, Parent and Sponsors.....14
10. Source and Amount of Funds............................................15
11. Background of the Offer...............................................15
12. Purpose of the Offer; Plans for the Company; Statutory Requirements;
Approval of the Merger; Appraisal Rights..............................20
13. The Transaction Documents.............................................22
14. Dividends and Distributions...........................................31
15. Conditions of the Offer...............................................31
16. Certain Legal Matters; Regulatory Approvals...........................33
17. Fees and Expenses.....................................................35
18. Miscellaneous.........................................................35
Schedule I....................................................................S-1
Schedule II...................................................................S-3
SUMMARY TERM SHEET
NPSP Acquisition Corp., a wholly owned subsidiary of F&H Acquisition
Corp., is offering to purchase all outstanding shares of common stock, par value
$0.01 per share, of Fox & Hound Restaurant Group ("Fox & Hound") for $16.30 net
per share in cash, upon the terms and subject to the conditions set forth in
this Amended and Restated Offer to Purchase (the "Offer to Purchase") and the
related Letter of Transmittal. The following are some of the questions you, as a
Fox & Hound stockholder, may have and answers to those questions. This summary
term sheet is not meant to be a substitute for the information contained in the
remainder of this Offer to Purchase and the related Letter of Transmittal, and
the information contained in this summary term sheet is qualified in its
entirety by the more detailed descriptions and explanations contained in this
Offer to Purchase and the related Letter of Transmittal. We urge you to
carefully read this entire Offer to Purchase and the related Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is NPSP Acquisition Corp. We are a Delaware corporation formed
to serve as an acquisition vehicle with no current operations other than those
incident to the commencement of the offer. We are a wholly owned subsidiary of
F&H Acquisition Corp., a Delaware corporation owned by Newcastle Partners, L.P.,
a Texas limited partnership ("Newcastle"), and Steel Partners II, L.P., a
Delaware limited partnership ("Steel"). See "The Offer--Section 9".
WHAT SECURITIES ARE YOU OFFERING TO PURCHASE?
We are offering to purchase all of the outstanding common stock, par
value $0.01 per share, of Fox & Hound. We refer to one share of Fox & Hound
common stock as a "share" or "Share". See "Introduction".
HOW MUCH ARE YOU OFFERING TO PAY FOR MY SECURITIES AND WHAT IS THE FORM OF
PAYMENT?
We are offering to pay you $16.30 per share in cash without brokerage
fees, commissions or, except in certain circumstances, transfer taxes. See
"Introduction".
DO YOU HAVE THE FINANCIAL RESOURCES TO PAY FOR THE SHARES?
Yes. We will need approximately $150.2 million to purchase all Shares
pursuant to the offer not already owned by F&H Acquisition Corp. and to pay
related fees and expenses. As of February 2, 2006, Newcastle and Steel
(together, the "Sponsors") had cash and cash equivalents and short-term
investments substantially in excess of the approximately $150.2 million required
to acquire the Shares. Accordingly, the offer is not conditioned upon any
financing arrangements. See "The Offer--Section 10".
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
Because (i) the form of payment for your Shares consists solely of cash
and (ii) the purchase of the Shares is not conditioned upon any financing
arrangements, we do not think our financial condition is material to your
decision whether to tender in the offer.
WHAT DOES THE BOARD OF DIRECTORS OF FOX & HOUND RESTAURANT GROUP THINK OF THE
OFFER?
Fox & Hound has terminated its merger agreement with affiliates of Levine
Leichtman Capital Partners, Inc. ("LLCP") and has signed a tender offer/merger
agreement with Parent and us, and for limited purposes with Newcastle and Steel.
Based on the unanimous recommendation of a special committee consisting of its
independent directors and the advice of independent counsel and financial
advisors, Fox & Hound's Board unanimously:
o determined that the terms of the tender offer and the merger are fair to
and in the best interests of Fox & Hound and its stockholders;
o approved the merger agreement and the transactions contemplated thereby;
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o consented to the tender offer, and
o recommended that Fox & Hound stockholders accept the tender offer and
tender their shares pursuant to the tender offer and, if necessary,
adopt the merger agreement.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You have until the expiration date of the offer to tender. The offer
currently is scheduled to expire at 12:00 Midnight, New York City time, on
Thursday, February 16, 2006. We currently expect that the offer will be extended
until the principal conditions to the offer, which are described below, are
satisfied. If the offer is extended, we will issue a press release announcing
the extension at or before 9:00 A.M. New York City time on the next business day
after the date the offer was scheduled to expire. See "The Offer--Section 1".
CAN THE TENDER OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Yes. We have agreed in the merger agreement that we may extend the tender
offer beyond Thursday, February 16, 2006, without the consent of Fox & Hound:
o if any of the conditions to the tender offer have not been satisfied or
waived;
o if required by law; or
o for up to 20 business days beyond the scheduled expiration date if, at
that date, more than 50% but less than 90% of the outstanding shares of
common stock have been validly tendered and not withdrawn.
Our right to extend the tender offer is subject to Fox & Hound's right
to terminate the merger agreement if the tender offer and the merger have not
been consummated by May 31, 2006. We may also, without the consent of Fox &
Hound, provide for a "subsequent offering period" of 10 to 20 business days and,
if requested by Fox & Hound, we are obligated to provide for such a "subsequent
offering period." A subsequent offering period is different from an extension of
the tender offer. During a subsequent offering period, you would not be able to
withdraw any of the shares that you had already tendered (because we would have
already accepted those shares for payment); you also would not be able to
withdraw any of the shares that you tender during the subsequent offering
period.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to buy any shares if:
o upon the expiration of the tender offer, there has not been tendered
(without withdrawal) shares representing, together with any shares
beneficially owned by Parent and its subsidiaries, including us, at
least a majority of the outstanding shares on a fully-diluted basis (we
call this condition the "minimum condition");
o any applicable waiting period under the Hart-Scott-Rodino Act has not
expired or terminated;
o there shall have been entered, enforced, instituted or issued by any
governmental authority any legally o binding judgment, order, temporary
restraining order, temporary or permanent injunction, ruling,
proceeding, action, suit, charge or decree:
prohibiting the tender offer or the merger or any related
transaction;
limiting Fox & Hound's or our ownership or operation of any
material portion of Fox & Hound's or our businesses or assets;
limiting our or our affiliates' ability to exercise full rights
of ownership in Fox & Hound's shares; or
that would otherwise reasonably be expected to require us or our
affiliates to divest any shares of Fox & Hound; or
2
that, subject to certain exceptions, would be reasonably expected
to have a material adverse effect on the business, financial
condition or results of operations of Fox & Hound and its
subsidiaries, taken as a whole, or on the business, assets,
condition (financial or otherwise), liabilities or the results of
operations of us and our subsidiaries, taken as a whole, or on
the ability of Fox & Hound to consummate the transactions
contemplated by the merger agreement;
o there shall be any order, law, rule or other regulation that is
reasonably likely to result in any of the consequences listed in the
bullet point above;
o there have occurred any changes, conditions, events or developments that
would have, or be reasonably likely to have, individually or in the
aggregate, subject to certain exceptions, a material adverse effect
on the business, financial condition or results of operations of Fox &
Hound and its subsidiaries, taken as a whole, or on the ability of Fox &
Hound to consummate the transactions contemplated by the merger
agreement;
o (i) any third party shall have acquired, or entered into a definitive
agreement or agreement in principle to acquire, beneficial ownership of
50% or more of Fox & Hound's outstanding shares, or (ii) Fox & Hound's
Board, its special committee or any other Board committee shall have
withdrawn, modified or changed, in a manner adverse to us, its
recommendation of our offer, the merger or the merger agreement or shall
have approved another party's proposal to acquire Fox & Hound; or
o the merger agreement has been terminated.
The tender offer is also subject to a number of other conditions. We
can waive some of the conditions to the tender offer without Fox & Hound's
consent; however, we cannot waive the minimum condition unless the Company
consents. See The Offer--Section 15.
UNDER WHAT CIRCUMSTANCES WOULD FOX & HOUND BE OBLIGATED TO PAY A TERMINATION FEE
TO US IF THE TENDER OFFER IS TERMINATED?
Under the merger agreement, Fox & Hound has agreed to reimburse us for
up to $1,000,000 of our expenses if we terminate the merger agreement because of
Fox & Hound's material breach of the merger agreement and, if within 12 months
after the date of termination, Fox & Hound enters into an agreement with a third
party to acquire the Company, submits such an agreement to stockholders for
adoption or completes such a transaction with a third party, Fox & Hound is
obligated to pay us a $5,000,000 termination fee.
If we terminate the merger agreement because Fox & Hound's Board (i)
withdraws or modifies in a manner adverse to us the approval or recommendation
of the offer, the merger agreement and the merger, (ii) recommends or approves
any third party proposal to acquire the Company, or (iii) enters into or
publicly announces the Company's intention to enter into an acquisition
agreement (other than a confidentiality agreement) with a third party, Fox &
Hound has agreed to reimburse us for up to $1,000,000 of our expenses and pay us
a $5,000,000 termination fee.
If Fox & Hound terminates the merger agreement because Fox & Hound's
Board withdraws or modifies in a manner adverse to us its approval or
recommendation of the offer, the merger agreement and the merger, Fox & Hound
has agreed to reimburse us for up to $1,000,000 of our expenses and pay us a
$5,000,000 termination fee.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we decide to extend the offer, we will inform American Stock
Transfer & Trust Company, the depositary for the offer, of that fact and will
make a public announcement of the extension, no later than 9:00 A.M., New York
City time, on the next business day after the date the offer was scheduled to
expire. See "The Offer--Section 1".
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal and any other required
documents, to American Stock Transfer & Trust Company, the depositary for the
3
offer, not later than the time the offer expires. If your shares are held in
street name by your broker, dealer, bank, trust company or other nominee, such
nominee can tender your shares through The Depository Trust Company. If you
cannot deliver everything required to make a valid tender to the depositary
before the expiration of the offer, you may have a limited amount of additional
time by having a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a member of a recognized Medallion
Program approved by The Securities Transfer Association Inc., including the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange
Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion
Signature Program (MSP), guarantee, pursuant to a Notice of Guaranteed Delivery,
that the missing items will be received by the depositary within three business
days. However, the depositary must receive the missing items within that three
business day period. See "The Offer--Section 3".
UNTIL WHAT TIME CAN I WITHDRAW TENDERED SHARES?
You can withdraw tendered shares at any time until the offer has
expired, and, if we have not by March 16, 2006, agreed to accept your shares for
payment, you can withdraw them at any time after such time until we accept
shares for payment. You may not, however, withdraw shares tendered during a
subsequent offering period, if one is included. See "The Offer--Section 4".
HOW DO I WITHDRAW TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or
a facsimile of one, with the required information to American Stock Transfer &
Trust Company while you have the right to withdraw the shares. See "The
Offer--Section 4".
WHEN AND HOW WILL I BE PAID FOR MY TENDERED SHARES?
Subject to the terms and conditions of the Offer, we will pay for all
validly tendered and not withdrawn shares promptly after termination or
withdrawal of the Offer. See "The Offer--Section 2".
We will pay for your validly tendered and not withdrawn shares by
depositing the purchase price with American Stock Transfer & Trust Company,
which will act as your agent for the purpose of receiving payments from us and
transmitting such payments to you. In all cases, payment for tendered shares
will be made only after timely receipt by American Stock Transfer & Trust
Company of certificates for such shares (or of a confirmation of a book-entry
transfer of such shares as described in "The Offer--Section 3--Book-Entry
Delivery"), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other required documents for such shares. See "The
Offer--Section 2".
WILL THE OFFER BE FOLLOWED BY A MERGER IF ALL THE FOX & HOUND SHARES ARE NOT
TENDERED IN THE OFFER?
If we accept for payment and pay for a number of Shares, which,
together with the Shares then owned by F&H Acquisition Corp. and its
subsidiaries (including us), represents at least a majority of the outstanding
shares on a fully diluted basis, NPSP Acquisition Corp. expects to be merged
with and into Fox & Hound. Upon consummation of that merger, F&H Acquisition
Corp. will own all of the shares and all remaining stockholders (other than us,
F&H Acquisition Corp., the Sponsors and stockholders properly exercising their
appraisal rights) will receive the price per share paid in the offer. See "The
Offer--Section 12--Purpose of the Offer; Plans for the Company".
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL FOX &
HOUND CONTINUE AS A PUBLIC COMPANY?
Upon consummation of the merger, Fox & Hound will no longer be publicly
owned. Even if the merger does not take place, if we purchase all the tendered
shares, there may be so few remaining stockholders and publicly held shares that
the shares will no longer be eligible to be traded on a securities exchange,
there may not be a public trading market for the shares, and Fox & Hound may
cease making filings with the Securities and Exchange Commission or otherwise
4
cease being required to comply with the Securities and Exchange Commission's
rules relating to publicly held companies. See "The Offer--Section 7".
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the offer is successful, NPSP Acquisition Corp. expects to conclude
a merger transaction in which all shares of Fox & Hound will be exchanged for an
amount in cash per share equal to the price per share paid in the offer. If the
proposed second-step merger takes place, stockholders who do not tender in the
offer (other than those properly exercising their appraisal rights) will receive
the same amount of cash per share that they would have received had they
tendered their shares in the offer. Therefore, if such merger takes place, the
only difference between tendering and not tendering shares in the offer is that
tendering stockholders will be paid earlier. If, however, the merger does not
take place and the offer is consummated, the number of stockholders and shares
that are still in the hands of the public may be so small that there will no
longer be an active or liquid public trading market (or, possibly, any public
trading market) for shares held by stockholders other than NPSP Acquisition
Corp., which may affect prices at which shares trade. Also, as described above,
Fox & Hound may cease making filings with the Securities and Exchange Commission
or being required to comply with the Securities and Exchange Commission's rules
relating to publicly held companies. See "The Offer--Section 7".
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On December 9, 2005, the last full business day before the announcement
of our intention to commence the offer, the last reported sales price of Fox &
Hound common stock reported on the Nasdaq was $13.22 per share. Please obtain a
recent quotation for your shares prior to deciding whether or not to tender.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER?
In general, your sale of shares pursuant to the offer will be a taxable
transaction for U.S. federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign income or other tax laws.
You should consult your tax advisor about the tax consequences to you of
participating in the offer in light of your particular circumstances. See "The
Offer--Section 5".
IF I ALREADY TENDERED MY SHARES IN THE ORIGINAL OFFER, DO I HAVE TO DO ANYTHING
NEW?
No. Fox & Hound stockholders do not have to take any action regarding
any Shares previously validly tendered and not withdrawn. If the Offer is
completed, these Shares will be accepted for payment and such stockholder will
receive the offer price of $16.30 per Share, net to the seller in cash without
interest, less any applicable withholding taxes.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
You can call MacKenzie Partners, Inc., the information agent for the
offer, at (212) 929-5500 (collect) or (800) 322-2885 (toll-free). See the back
cover of this Offer to Purchase.
5
To the Stockholders of Fox & Hound Restaurant Group:
INTRODUCTION
We, NPSP Acquisition Corp. (the "Purchaser"), a Delaware corporation
and wholly owned subsidiary of F&H Acquisition Corp., a Delaware corporation
("Parent"), are offering to purchase all outstanding shares of common stock (the
"Common Stock"), par value $0.01 per share (the "Shares"), of Fox & Hound
Restaurant Group, a Delaware corporation ("Fox & Hound" or the "Company") for
$16.30 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in this Offer to Purchase and the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Stockholders who have Shares registered in
their own names and tender directly to American Stock Transfer & Trust Company,
the depositary for the Offer (the "Depositary"), will not have to pay brokerage
fees or commissions. Stockholders with Shares held in street name by a broker,
dealer, bank, trust company or other nominee should consult with their nominee
to determine if they charge any transaction fees. Except as set forth in
Instruction 6 of the Letter of Transmittal, stockholders will not have to pay
transfer taxes on the sale of Shares pursuant to the Offer. We will pay all
charges and expenses of the Depositary and MacKenzie Partners, Inc. (the
"Information Agent") incurred in connection with the Offer. See "The
Offer--Section 17".
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated January 30, 2006 (the "Merger Agreement"), by and among Parent, Purchaser
and Fox & Hound, and for limited purposes, Newcastle Partners, L.P., a Texas
limited partnership ("Newcastle") and Steel Partners II, L.P., a Delaware
limited partnership ("Steel"). Pursuant to the Merger Agreement, as soon as
practicable after the completion of the Offer and the satisfaction or waiver of
all conditions to the Merger (as defined below), the Purchaser will be merged
with and into Fox & Hound with Fox & Hound surviving the Merger as a
wholly-owned subsidiary of F&H Acquisition Corp. (the "Merger"). At the
Effective Time of the Merger, each Share then outstanding (other than Shares
owned by Parent, the Purchaser, or by stockholders, if any, who are entitled to
and properly exercise dissenters' rights under Delaware law) will be converted
into the right to receive $16.30 per Share of Common Stock net to the seller in
cash, or any higher price per Share paid in the Offer (such price being referred
to herein as the "Offer Price"), without interest thereon (and subject to
applicable withholding taxes). Stockholders who exercise dissenters' rights
under Delaware law will receive a judicially determined fair value for their
Shares, which value could be more or less than the price per Share to be paid in
the Merger. (See Section 12 - "Purpose of the Offer; Plans for the Company;
Statutory Requirements; Approval of the Merger; Appraisal Rights.")
The Merger Agreement is more fully described in Section 13 - "The
Transaction Documents."
THE BOARD OF DIRECTORS OF THE COMPANY, BASED ON THE UNANIMOUS
RECOMMENDATION OF A SPECIAL COMMITTEE CONSISTING OF INDEPENDENT DIRECTORS AND
THE ADVICE OF INDEPENDENT COUNSEL AND FINANCIAL ADVISORS, HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER, DETERMINED THAT THE MERGER AGREEMENT AND THE
OFFER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS,
AND RESOLVED TO RECOMMEND ACCEPTANCE OF THE OFFER TO THE STOCKHOLDERS, AND THAT
THE STOCKHOLDERS TENDER THEIR SHARES IN THE OFFER AND, IF APPLICABLE, VOTE TO
ADOPT THE MERGER AGREEMENT.
The Company has advised the Purchaser that the Board of Directors has
received the opinion of North Point Advisors LLC, the Company's financial
advisor, to the effect that as of such date and based on and subject to the
matters stated in such opinion, the $16.30 per share in cash to be received by
the holders of Shares (other than Parent, the Purchaser or their respective
affiliates) pursuant to the Offer and the Merger is fair from a financial point
of view to such holders. Copies of those opinions are set forth in full as
exhibits to the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") filed with the Securities and Exchange Commission
(the "Commission") on February 3, 2006 and which is being mailed to the
Company's stockholders. STOCKHOLDERS ARE URGED TO READ THE FULL TEXT OF THE
OPINIONS CAREFULLY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BEFORE THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES, WHICH, TOGETHER WITH THE SHARES THEN OWNED BY PARENT AND ITS
SUBSIDIARIES, REPRESENTS AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION").
6
The Company has represented in the Merger Agreement that as of the
close of business on January 27, 2006, (i) 10,048,331 shares of Common Stock
were issued and outstanding, (ii) no shares of preferred stock were issued and
outstanding, and (iii) 2,373,082 shares of Common Stock were reserved for
issuance pursuant to outstanding Company options. Parent beneficially owns
836,049 Shares, representing approximately 8.3% of the outstanding Shares. The
Company has informed Parent and the Purchaser that as of February 1, 2006, there
were 10,045,641 shares of Common Stock issued and outstanding.
The purpose of the Offer is to acquire control of, and the entire
equity interest in, the Company. We currently intend, as soon as practicable
after consummation of the Offer, to seek maximum representation on the Company's
Board of Directors (the "Company Board") and to seek to have the Company
consummate a merger or other similar business combination with us (or one of our
subsidiaries). Under the Delaware Law, if we acquire, pursuant to the Offer or
otherwise, at least 90% of the outstanding Shares, we believe we would be able
to approve a merger or other business combination without a vote of the Company
Board or other stockholders. If we do not acquire at least 90% of the
outstanding Shares, we will have to seek approval of a merger or other business
combination by the Company's stockholders. Approval of a merger or other
business combination requires the affirmative vote of holders of a majority of
the outstanding Shares. Pursuant to such merger or business combination,
outstanding Shares not owned by Parent or its subsidiaries (including us) would
be converted into the right to receive cash in an amount equal to the price per
Share provided pursuant to the Offer.
Parent and the Purchaser have been advised by the Company that the
Company did not declare any dividends in fiscal 2004 and 2003 and does not
anticipate paying any cash dividends in the foreseeable future. If we acquire
control of the Company, we currently intend that no dividends will be declared
on the Shares prior to the acquisition of the entire equity interest in the
Company.
This Offer to Purchase and the related Letter of Transmittal contain
important information, and you should carefully read both in their entirety
before you make a decision with respect to the Offer.
THE OFFER
1. TERMS OF THE OFFER. Upon the terms and subject to the
conditions set forth in the Offer, we will accept for payment and pay for all
Shares that are validly tendered before the Expiration Date and not withdrawn.
"Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
February 16, 2006, unless extended, in which event "Expiration Date" means the
latest time and date at which the Offer, as so extended, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of
the Minimum Condition and the other conditions set forth in "The Offer--Section
15".
In the Merger Agreement, we have agreed that we will not, without the
prior written consent of the Company, extend the Offer beyond the Expiration
Date, except that we may, without the consent of the Company, extend the Offer
as follows: (i) if, at any scheduled expiration of the Offer any of the
conditions to the Offer including, without limitation, the Minimum Condition
shall not have been satisfied or waived, we may extend the Offer for one or more
periods as reasonably necessary to permit such condition to be satisfied, in
increments of not more than five business days each; (ii) we may extend the
Offer for such period as may be required by any rule, regulation or
interpretation of the Commission or the staff thereof applicable to the Offer;
or (iii) if, at any scheduled expiration of the Offer, the number of Shares that
shall have been validly tendered and not withdrawn pursuant to the Offer,
together with any Shares then owned by Parent or its subsidiaries (including us)
satisfies the Minimum Condition but represents less than 90% of the Shares
outstanding, we may extend the Offer (one or more times) for an aggregate
additional period of not more than twenty (20) business days. Our rights to
extend the Offer pursuant to the foregoing clauses (i) through (iii) are subject
to the Company's right to terminate the Merger Agreement if the Offer shall not
have been consummated by May 31, 2006. We may also, without the consent of the
Company, and shall if requested by the Company, make available a subsequent
offering period in accordance with Rule 14d-11 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") (a "Subsequent Offering Period") of not
less than 10 business days nor more than 20 business days. There can be no
assurance that we will exercise our right to extend the Offer.
7
Subject to the applicable rules and regulations of the Commission, we
expressly reserve the right, in our sole discretion, to delay acceptance for
payment of any Shares (or delay payment for any Shares, regardless of whether
such Shares were theretofore accepted for payment) pending the receipt of
required governmental consents, or, subject to the limitations set forth in the
Merger Agreement, to terminate the Offer and not to accept for payment or pay
for any Shares not theretofore accepted for payment or paid for upon the failure
of any of the Offer Conditions, by giving oral or written notice of such delay
or termination to the Depositary. Our right to delay payment for any Shares or
not to pay for any Shares theretofore accepted for payment is subject to the
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act relating to our obligation to pay for or return tendered
Shares promptly after the termination or withdrawal of the Offer.
If we extend the Offer, are delayed in accepting for payment or paying
for Shares or are unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to our rights under the Offer, the
Depositary may, on our behalf, retain all Shares tendered, and such Shares may
not be withdrawn except as provided in "The Offer--Section 4". Our reservation
of the right to delay acceptance for payment of or payment for Shares is subject
to applicable law, which requires that we pay the consideration offered or
return the Shares deposited by or on behalf of stockholders promptly after the
termination or withdrawal of the Offer.
Any extension, delay, termination, waiver or amendment of the Offer
will be followed as promptly as practicable by a public announcement thereof.
Without limiting the manner in which we may choose to make any public
announcement, we will have no obligation (except as otherwise required by
applicable law) to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service. In
the case of an extension of the Offer, we will make a public announcement of
such extension no later than 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date.
We have also agreed in the Merger Agreement that we will not, without
the prior written consent of the Company: (i) decrease the amount or change the
form of consideration payable in the Offer; (ii) decrease the number of Shares
sought in the Offer; (iii) impose additional conditions to the Offer; (iv)
purchase any Shares pursuant to the Offer that when added to shares owned by
Parent and its affiliates would represent less than the Minimum Condition; or
(v) amend any other term or condition of the Offer in any manner adverse to the
holders of Shares.
If the Minimum Condition or any of the other Offer Conditions has not
been satisfied by Midnight, New York City time, on Thursday, February 16, 2006
(or any other time then set as the Expiration Date), we may elect (i) subject to
the qualifications described above with respect to the extension of the Offer,
to extend the Offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the Offer, as extended, subject to the
terms of the Offer, (ii) subject to complying with applicable rules and
regulations of the Commission and to the terms of the Merger Agreement
(including, if necessary, obtaining the prior written consent of the Company),
to accept for payment all Shares so tendered and not extend the Offer, or (iii)
subject to the terms of the Merger Agreement, to terminate the Offer and not
accept for payment any Shares and return all tendered Shares to tendering
stockholders.
Except as set forth above, and subject to the applicable rules and
regulations of the Commission, we expressly reserve the right to waive any
condition of the Offer (other than the Minimum Condition), increase the Offer
Price or amend the Offer in any respect. Any extension of the period during
which the Offer is open, or delay in acceptance for payment or payment,
termination or amendment of the Offer, will be followed as promptly as
practicable by public announcement thereof, such announcement in the case of an
extension to be issued not later than 9:00 a.m. New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Without limiting our obligation under such rule or the manner in which we may
choose to make any public announcement, we currently intend to make
announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If we make a material change in the terms of the Offer or the
information concerning the Offer or if we waive a material condition of the
Offer, we will disseminate additional tender offer materials and extend the
Offer if and to the extent required by Rules 14d-4(c), 14d-6(c) and 14(e)-1
under the Exchange Act (which require that material changes be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) or otherwise. The minimum period during which an offer must remain
8
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 changes. In the Commission's
view, an offer should remain open for a minimum of five business days from the
date the material change is first published, sent or given to stockholders, and
with respect to a change in price or a change in percentage of securities
sought, a minimum ten business day period is generally required to allow for
adequate dissemination to stockholders and investor response. For purposes of
the Offer, a "business day" means any day other than a Saturday, Sunday or a
federal holiday, and consists of the time period from 12:01 a.m. through 12:00
Midnight, New York City time.
The Company has provided Parent and us with the Company's stockholder
lists and security position listings for the purpose of disseminating the Offer
to holders of Shares. Parent and us and our agents will mail this Offer to
Purchase and the related Letter of Transmittal to record holders of Shares and
will furnish same to brokers, dealers, commercial banks and similar persons
whose names, or the names of whose nominees, appear on the stockholder lists or,
if applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject
to the conditions of the Offer, we will accept for payment and pay for all
Shares validly tendered and not withdrawn promptly after the termination or
withdrawal of the Offer. For a description of our right to terminate the Offer
and not accept for payment or pay for Shares, see "The Offer--Section 15". If we
increase the consideration to be paid for Shares pursuant to the Offer, we will
pay such increased consideration for all Shares purchased pursuant to the Offer.
We do not presently intend to seek to assert the conditions listed in Section 15
after the Expiration Date of the Offer.
We will pay for Shares accepted for payment pursuant to the Offer by
depositing the purchase price with the Depositary, which will act as your agent
for the purpose of receiving payments from us and transmitting such payments to
you. In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares (or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in "The
Offer--Section 3")), (ii) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and (iii) any other required documents. For a
description of the procedure for tendering Shares pursuant to the Offer, see
"The Offer--Section 3". Accordingly, payment may be made to tendering
stockholders at different times if delivery of the Shares and other required
documents occurs at different times. Under no circumstances will we pay interest
on the consideration paid for Shares pursuant to the Offer, regardless of any
delay in making such payment.
For purposes of the Offer, we shall be deemed to have accepted for
payment tendered Shares when, as and if we give oral or written notice of our
acceptance to the Depositary.
We reserve the right to transfer or assign, in whole or from time to
time in part, to one or more of our affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve us of our obligations under the Offer or prejudice your rights to
receive payment for Shares validly tendered and accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or, in
the case of Shares tendered by book-entry transfer, such Shares will be credited
to an account maintained at the Book-Entry Transfer Facility), without expense
to you, promptly following the expiration or termination of the Offer.
3. PROCEDURE FOR TENDERING SHARES.
VALID TENDER OF SHARES. To tender Shares pursuant to the Offer, either
(i) the Depositary must receive at one of its addresses set forth on the back
cover of this Offer to Purchase (a) a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents required by
the Letter of Transmittal and (b) certificates for the Shares to be tendered or
delivery of such Shares pursuant to the procedures for book-entry transfer
described below (and a confirmation of such delivery including an Agent's
Message (as defined below) if the tendering stockholder has not delivered a
9
Letter of Transmittal), in each case by the Expiration Date, or (ii) the
guaranteed delivery procedure described below must be complied with.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS,
INCLUDING THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT YOUR OPTION AND RISK,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, WE RECOMMEND REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IN TIME TO BE RECEIVED ON OR PRIOR
TO THE EXPIRATION DATE.
The tender of Shares pursuant to any one of the procedures described
above will constitute your acceptance of the Offer, as well as your
representation and warranty that (i) you own the Shares being tendered within
the meaning of Rule 14e-4 under the Exchange Act, (ii) the tender of such Shares
complies with Rule 14e-4 under the Exchange Act and (iii) you have the full
power and authority to tender, sell, assign and transfer the Shares tendered, as
specified in the Letter of Transmittal. Our acceptance for payment of Shares
tendered by you pursuant to the Offer will constitute a binding agreement
between us with respect to such Shares, upon the terms and subject to the
conditions of the Offer.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with
respect to the Shares for purposes of the Offer at The Depository Trust Company
(the "Book-Entry Transfer Facility") within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
system of the Book-Entry Transfer Facility may deliver Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the procedures of the Book-Entry Transfer Facility.
However, although delivery of Shares may be effected through book-entry
transfer, the Letter of Transmittal (or facsimile thereof) properly completed
and duly executed together with any required signature guarantees or an Agent's
Message and any other required documents must, in any case, be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase by the Expiration Date, or the guaranteed delivery procedure described
below must be complied with. Delivery of the Letter of Transmittal and any other
required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Depositary. "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 stating that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that 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 Company may
enforce such agreement against such participant.
SIGNATURE GUARANTEES. All signatures on a Letter of Transmittal must be
guaranteed by a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a member of a recognized Medallion
Program approved by The Securities Transfer Association Inc., including the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange
Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion
Signature Program (MSP) or any other "eligible guarantor institution" (as such
term is defined in Rule 17Ad-15 under the Exchange Act) (each an "Eligible
Institution"), unless (i) the Letter of Transmittal is signed by the registered
holder of the Shares tendered therewith and such holder has not completed the
box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii)
such Shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
GUARANTEED DELIVERY. If you wish to tender Shares pursuant to the Offer
and cannot deliver such Shares and all other required documents to the
Depositary by the Expiration Date or cannot complete the procedure for delivery
by book-entry transfer on a timely basis, you may nevertheless tender such
Shares if all of the following conditions are met:
o such tender is made by or through an Eligible Institution;
o a properly completed and duly executed Notice of Guaranteed
Delivery in the form provided by the Purchaser is received by the
Depositary (as provided below) by the Expiration Date; and
o the certificates for such Shares (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account
at the Book-Entry Transfer Facility), together with a properly
completed and duly executed Letter of Transmittal (or facsimile
10
thereof) together with any required signature guarantee or an
Agent's Message and any other required documents, are received by
the Depositary within three business days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, telex, facsimile transmission or mail to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
such Notice.
BACKUP WITHHOLDING. Under the U.S. federal income tax laws, backup
withholding will apply to any payments made pursuant to the Offer unless you
provide the Depositary with your correct taxpayer identification number and
certify that you are not subject to such backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. If you are a
non-resident alien or foreign entity not subject to backup withholding, you must
give the Depositary a completed Form W-8BEN Certificate of Foreign Status before
receipt of any payment.
APPOINTMENT OF PROXY. By executing a Letter of Transmittal, you
irrevocably appoint our designees as your proxies in the manner set forth in the
Letter of Transmittal to the full extent of your rights with respect to the
Shares tendered and accepted for payment by us (and any and all other Shares or
other securities issued or issuable in respect of such Shares on or after
January 6, 2006). All such proxies are irrevocable and coupled with an interest
in the tendered Shares. Such appointment is effective only upon our acceptance
for payment of such Shares. Upon such acceptance for payment, all prior proxies
and consents granted by you with respect to such Shares and other securities
will, without further action, be revoked, and no subsequent proxies may be given
(and, if previously given, will cease to be effective). Our designees will be
empowered to exercise all your voting and other rights as they, in their
reasonable discretion, may deem proper at any annual, special or adjourned
meeting of the Company's stockholders. We reserve the right to require that, in
order for Shares to be deemed validly tendered, immediately upon our acceptance
for payment of such Shares, we or our designee must be able to exercise full
voting rights with respect to such Shares and other securities (including voting
at any meeting of stockholders).
The foregoing proxies are effective only upon acceptance for payment of
Shares pursuant to the Offer. The Offer does not constitute a solicitation of
proxies, absent a purchase of Shares, for any meeting of the Company's
stockholders.
DETERMINATION OF VALIDITY. We will determine, in our reasonable
discretion, all questions as to the form of documents and the validity,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares, and our determination shall be final and binding, subject to the
tendering stockholder's right to bring any dispute with respect thereto before a
court of competent jurisdiction. We reserve the absolute right to reject any or
all tenders of Shares that we determine not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of our
counsel, be unlawful. We also reserve the absolute right to waive any defect or
irregularity in any tender of Shares. None of the Purchaser, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defect or irregularity in tenders or waiver of any such
defect or irregularity or incur any liability for failure to give any such
notification.
4. WITHDRAWAL RIGHTS. You may withdraw tenders of Shares made
pursuant to the Offer at any time before the Expiration Date. Thereafter, such
tenders are irrevocable, except that they may be withdrawn after March 16, 2006,
unless such Shares have been accepted for payment as provided in this Offer to
Purchase. If we extend the period of time during which the Offer is open, are
delayed in accepting for payment or paying for Shares or are unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to our rights under the Offer, the Depositary may, on our
behalf, retain all Shares tendered, and such Shares may not be withdrawn except
as otherwise provided in this Section 4.
For your withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal with respect to the Shares must be
timely received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase, and the 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 the name of the registered holder of Shares, if different
from that of the person who tendered such Shares. If the Shares to be withdrawn
have been delivered to the Depositary, a signed notice of withdrawal with
(except in the case of Shares tendered by an Eligible Institution) signatures
11
guaranteed by an Eligible Institution must be submitted before the release of
such Shares. In addition, such notice must specify, in the case of Shares
tendered by delivery of certificates, the name of the registered holder (if
different from that of the tendering stockholder) and the serial numbers shown
on the particular certificates evidencing the Shares to be withdrawn or, in the
case of Shares tendered by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter
be deemed not validly tendered. However, withdrawn Shares may be retendered by
again following one of the procedures described in "The Offer--Section 3" at any
time before the Expiration Date.
If we include a Subsequent Offering Period (as described in more detail
in "The Offer--Section 1") following the Offer, no withdrawal rights will apply
to Shares tendered in such Subsequent Offering Period and no withdrawal rights
apply during such Subsequent Offering Period with respect to Shares previously
tendered in the Offer and accepted for payment.
We will determine, in our reasonable discretion, all questions as to
the form and validity (including time of receipt) of any notice of withdrawal,
and our determination shall be final and binding. None of the Purchaser, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in any notice of withdrawal or
waiver of any such defect or irregularity or incur any liability for failure to
give any such notification.
5. MATERIAL TAX CONSIDERATIONS. THE U.S. FEDERAL INCOME TAX
DISCUSSION SET FORTH BELOW IS BASED UPON PRESENT LAW. DUE TO THE INDIVIDUAL
NATURE OF MATERIAL TAX CONSEQUENCES, YOU ARE URGED TO CONSULT YOUR TAX ADVISORS
AS TO THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE OFFER, INCLUDING THE EFFECTS
OF APPLICABLE STATE, LOCAL AND OTHER TAX LAWS. The following discussion may not
apply to certain stockholders. For example, the following discussion may not
apply to you if you acquired your Shares pursuant to the exercise of stock
options or other compensation arrangements with the Company, you are not a
citizen or resident of the United States or you are otherwise subject to special
tax treatment under the Internal Revenue Code of 1986, as amended.
Your sale of Shares pursuant to the Offer will be a taxable transaction
for U.S. federal income tax purposes and may also be a taxable transaction under
applicable state, local and other tax laws. In general, if you tender Shares
pursuant to the Offer, you will recognize gain or loss equal to the difference
between the tax basis of your Shares and the amount of cash received in exchange
therefor. Such gain or loss will be capital gain or loss if you hold the Shares
as capital assets and will be long-term gain or loss if your holding period for
the Shares is more than one year as of the date of the sale of such Shares.
A stockholder whose shares are purchased in the Offer may be subject to
backup withholding unless certain information is provided to the Depositary or
an exemption applies. See "The Offer--Section 3--Backup Withholding".
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded on
Nasdaq under the symbol "FOXX." The following table sets forth for the periods
indicated the high and low sales prices per Share on Nasdaq during each quarter
presented:
Fiscal Year Ended
2003 High Low
---- ---
First Quarter $9.68 $7.10
Second Quarter 9.21 7.05
Third Quarter 10.95 9.10
Fourth Quarter 12.46 10.30
2004
First Quarter 14.40 11.19
Second Quarter 16.20 12.19
Third Quarter 14.37 9.47
Fourth Quarter 11.79 8.60
2005
First Quarter 12.36 10.51
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Second Quarter 12.61 10.95
Third Quarter 13.26 11.18
Fourth Quarter 13.10 10.16
DIVIDENDS. According to the Company 10-K, the Company did not declare
any dividends in fiscal 2004 and 2003 and does not anticipate paying any cash
dividends in the foreseeable future. If we acquire control of the Company, we
currently intend that no dividends will be declared on the Shares prior to the
acquisition of the entire equity interest in the Company.
On December 9, 2005, the last full business day before the announcement
of our intention to commence the Offer, the last reported sales price of the
Common Stock reported on Nasdaq was $13.22 per share. Please obtain a recent
quotation for your shares prior to deciding whether or not to tender.
7. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES;
STOCK EXCHANGE LISTING; REGISTRATION UNDER THE EXCHANGE ACT.
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES. If the
merger of the Company and us (or one of our subsidiaries) is consummated,
stockholders not tendering their Shares in the Offer (other than those properly
exercising their appraisal rights) will receive cash in an amount equal to the
price per Share paid in the Offer. Therefore, if such merger takes place, the
only difference between tendering and not tendering Shares in the Offer is that
tendering stockholders will be paid earlier. If, however, the merger does not
take place and the Offer is consummated, the number of stockholders and Shares
that are still in the hands of the public may be so small that there will no
longer be an active or liquid public trading market (or possibly any public
trading market) for Shares held by stockholders other than the Purchaser. We
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the price paid in
the Offer.
STOCK EXCHANGE LISTING. As stated above, the Company's Shares are
presently listed on Nasdaq. Depending upon the number of Shares purchased
pursuant to the Offer, the purchase of the Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and will reduce the number of holders of Shares, which could adversely affect
the liquidity and market value of the remaining Shares held by the public. Even
if the merger is not completed, depending upon the number of Shares tendered to
and purchased by Purchaser in the Offer, the Shares may no longer meet the
requirements of the National Association of Securities Dealers for continued
inclusion on Nasdaq.
If Nasdaq ceased publishing quotations for the Shares, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price or other quotations would be reported by other sources. The extent of the
public market for the Shares and the availability of such quotations would
depend, however, upon such factors as the number of stockholders and the
aggregate market value of the Shares available in the public market at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors. We cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares, or whether it would cause future market prices to be greater or
lesser than the price Purchaser is currently offering.
REGISTRATION UNDER THE EXCHANGE ACT. The Shares are currently
registered under the Exchange Act. Such registration may be terminated upon
application of the Company to the SEC if the Shares are neither listed on a
national securities exchange nor held by 300 or more holders of record.
Termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares and to the SEC and would make certain of the provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement to furnish a proxy statement pursuant to Section 14(a) in
connection with a stockholder's meeting and the related requirement to furnish
an annual report to stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions, no longer applicable
to the Shares. Furthermore, "affiliates" of the Company and persons holding
"restricted securities" of the Company may be deprived of the ability to dispose
of such securities pursuant to Rule 144 promulgated under the Securities Act of
13
1933 (the "Securities Act"). We intend to seek to cause the Company to terminate
registration of the Shares under the Exchange Act as soon after consummation of
the Offer as the requirements for termination of registration of the Shares are
met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. The information
concerning the Company contained in this Offer to Purchase has been taken from
or based upon publicly available documents and records on file with the SEC and
other public sources and is qualified in its entirety by reference thereto. None
of Parent, the Purchaser, the Sponsors, the Information Agent or the Depositary
can take responsibility for the accuracy or completeness of 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 but which are unknown to Parent, the Purchaser,
the Sponsors, the Information Agent or the Depositary.
According to the Company 10-K, the Company is a Delaware corporation
with its principal executive offices at 1551 North Waterfront Parkway, Suite
310, Wichita, Kansas 67206. The Company's telephone number is (316) 634-0505.
The Company owns and operates 77 restaurants under the "Fox and Hound" and
"Bailey's" brand names that each provide a social gathering place offering high
quality food, drinks and entertainment in an upscale, casual environment.
ADDITIONAL INFORMATION. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. The Company is required to
disclose in such proxy statements certain information, as of particular dates,
concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company. Such
reports, proxy statements and other information may be inspected at the public
reference room maintained by the SEC at 100 F Street, N.E., Washington, D.C.
20549. Copies of such material can also be obtained at prescribed rates from the
public reference room of the SEC at 100 F Street, N.E., Washington, D.C. 20549,
or free of charge at the Web site maintained by the SEC at http://www.sec.gov.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference room.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER, PARENT AND
SPONSORS. We are a Delaware corporation incorporated on December 19, 2005, with
principal executive offices at 300 Crescent Court, Suite 1110, Dallas, Texas
75201. The telephone number of our principal executive offices is (214)
661-7474. We were formed to serve as an acquisition vehicle for Parent, with no
current operations other than those incident to the commencement of the Offer.
The Purchaser is a wholly owned subsidiary of Parent.
Parent is a Delaware corporation incorporated on December 12, 2005,
with principal executive offices at 300 Crescent Court, Suite 1110, Dallas,
Texas 75201. The telephone number of Parent's principal executive offices is
(214) 661-7474. Parent is owned by Newcastle and Steel.
Newcastle is a private investment partnership that has been in business
for over twelve years. Newcastle specializes in identifying, researching,
analyzing and investing in under-valued securities. Newcastle's investment
approach employs the solid, proven principles of a disciplined, value-based
strategy focused primarily on smaller capitalization companies. As part of its
investment strategy, Newcastle has a demonstrated expertise in making active and
control investments.
Newcastle beneficially owns 836,049 Shares of the Company, representing
approximately 8.3% of the Company's outstanding Shares. As the general partner
of Newcastle, Newcastle Capital Management, L.P. ("Newcastle Capital") may be
deemed to beneficially own the 836,049 Shares, or approximately 8.3% of the
Company's outstanding Shares, beneficially owned by Newcastle. The principal
business of Newcastle Capital is acting as the general partner of Newcastle. As
the general partner of Newcastle Capital, Newcastle Capital Group, L.L.C.
("Newcastle Capital Group") may be deemed to beneficially own the 836,049
Shares, or approximately 8.3% of the Company's outstanding Shares, beneficially
owned by Newcastle. The principal business of Newcastle Capital Group is acting
as the general partner of Newcastle Capital. Mark E. Schwarz, as the managing
member of Newcastle Capital Group, the general partner of Newcastle Capital,
which in turn is the general partner of Newcastle, may also be deemed to
beneficially own the 836,049 Shares, or approximately 8.3% of the Company's
outstanding Shares, beneficially owned by Newcastle. Collectively, Newcastle,
Newcastle Capital and Newcastle Capital Group are referred to herein as the
14
"Newcastle Entities." Each of the Newcastle Entities are organized under the
laws of the State of Texas. The business address for each of the Newcastle
Entities is 300 Crescent Court, Suite 1110, Dallas, Texas 75201. The business
telephone number for each of the Newcastle Entities is (214) 661-7474.
Steel is a Delaware limited partnership that invests in the securities
of small cap companies. Warren G. Lichtenstein is Chairman of the Board,
Secretary and the Managing Member of Steel Partners, L.L.C., a Delaware limited
liability company ("Partners LLC"), which in turn is the general partner of
Steel. The principal business of Partners LLC is acting as the general partner
of Steel. The principal occupation of Mr. Lichtenstein is investing in the
securities of small cap companies. The principal business address of Mr.
Lichtenstein, Partners LLC and Steel is 590 Madison Avenue, 32nd Floor, New
York, New York 10022. As of the date hereof, Steel does not beneficially own any
Shares. Collectively, Steel and Partners LLC are referred to herein as the
"Steel Entities." The business telephone number for each of the Steel Entities
is (212) 520-2300.
The name, business address, principal occupation or employment,
five-year employment history and citizenship of each director and executive
officer of the Newcastle Entities, the Steel Entities, Parent and the Purchaser
and certain other information are set forth on Schedule I hereto.
Except as set forth elsewhere in this Offer to Purchase or Schedule I
or Schedule II to this Offer to Purchase: (i) none of the Newcastle Entities,
the Steel Entities, Parent or the Purchaser and, to the Newcastle Entities', the
Steel Entities', Parent's and the Purchaser's knowledge, the persons listed in
Schedule I hereto or any associate or majority owned subsidiary of the Newcastle
Entities, the Steel Entities, Parent, the Purchaser or of any of the persons so
listed, beneficially owns or has a right to acquire any Shares or any other
equity securities of the Company; (ii) none of the Newcastle Entities, the Steel
Entities, Parent, the Purchaser and, to the Newcastle Entities', the Steel
Entities', Parent's and the Purchaser's knowledge, the persons or entities
referred to in clause (i) above has effected any transaction in the Shares or
any other equity securities of the Company during the past 60 days; (iii) none
of the Newcastle Entities, the Steel Entities, Parent, the Purchaser and, to the
Newcastle Entities', the Steel Entities', Parent's and the Purchaser's
knowledge, the persons listed in Schedule I to this Offer to Purchase, has any
contract, arrangement, understanding or relationship 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 such securities, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies, consents or authorizations); (iv) during the two years
before the date of this Offer to Purchase, there have been no transactions
between the Newcastle Entities, the Steel Entities, Parent, the Purchaser, their
subsidiaries or, to the Newcastle Entities', the Steel Entities', Parent's and
the Purchaser's knowledge, any of the persons listed in Schedule I to this Offer
to Purchase, on the one hand, and the Company or any of its executive officers,
directors or affiliates, on the other hand, that would require reporting under
SEC rules and regulations; and (v) during the two years before the date of this
Offer to Purchase, there have been no contracts, negotiations or transactions
between the Newcastle Entities, the Steel Entities, Parent, the Purchaser, their
subsidiaries or, to the Newcastle Entities', the Steel Entities', Parent's and
the Purchaser's knowledge, any of the persons listed in Schedule I to this Offer
to Purchase, on the one hand, and the Company or any of its subsidiaries or
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.
10. SOURCE AND AMOUNT OF FUNDS. We will need approximately $150.2
million to purchase all of the outstanding Shares pursuant to the Offer and to
pay related fees and expenses. As of February 2, 2006, Newcastle and Steel had
aggregate cash and cash equivalents and short-term investments substantially in
excess of the approximately $150.2 million required to acquire the Shares. The
Purchaser intends to obtain all funds needed for the Offer through a capital
contribution or a loan from Newcastle and Steel. Newcastle and Steel plan to
provide the funds for such capital contribution from their available cash, cash
equivalents and working capital. The Offer is not subject to any financing
condition.
11. BACKGROUND OF THE OFFER. Below is a background description of
Parent's involvement with the Company.
On October 4, 2005, the Company announced that it signed a letter of
intent with Levine Leichtman Capital Partners ("LLCP") for the acquisition of
all of the Company's outstanding Common Stock for an all cash price of $14.00
15
per share, other than shares held by certain stockholders and members of
management. The Company's Board created a Special Committee of independent
directors to consider the proposal. The Special Committee unanimously approved
the letter of intent and recommended its approval by the Board. The Board
unanimously approved the Company entering into the letter of intent dated
October 4, 2005, which has an exclusivity agreement with LLCP that extends
through January 31, 2006. The Company agreed not to solicit alternative
transactions but may respond to certain unsolicited proposals and may terminate
the exclusivity agreement prior to January 31, 2006 upon receipt of a superior
proposal for an alternative transaction. Under certain circumstances, if the
Company terminates the exclusivity agreement for a superior proposal or the
Company enters into an agreement with respect to an alternative transaction
before May 1, 2006, the Company will be required to pay LLCP a fee of $5
million. In addition, the Company has agreed to reimburse LLCP for its expenses
in certain circumstances.
On November 21, 2005, Newcastle and its affiliates filed a Schedule 13G
with the SEC indicating that Newcastle beneficially owned 675,400 Shares as of
November 18, 2005, representing 6.7% of the Company's outstanding Shares.
On December 12, 2005, Parent issued a press release announcing (i) its
intention to commence a cash tender offer to purchase all Shares of the Company
not already owned by it for $14.75 per Share and (ii) that Newcastle and Steel
expect to commence the tender offer on or before December 23, 2005. Also on
December 12, 2005, Parent, Newcastle and Steel sent a letter to the Special
Committee of the Company's Board expressing Parent's willingness to negotiate
and enter into a definitive tender offer/merger agreement prior to commencement
of the Offer. In the letter, Parent, Newcastle and Steel expressed their belief
that its all-cash offer is superior to the $14.00 proposal made in the letter of
intent, dated October 4, 2005, executed by the Company with LLCP, as it will
provide stockholders and optionholders with immediate liquidity at a premium to
market and an immediate opportunity to maximize their investment in the Company.
On December 13, 2005, Parent and its affiliates filed a Schedule 13D
with the SEC indicating that the Newcastle Entities and Parent beneficially
owned 836,049 Shares as of December 12, 2005, representing 8.3% of the Company's
outstanding Shares.
On December 14, 2005, Parent entered into discussions with the Company
on the terms of a tender offer/merger agreement. Between December 15, 2005 and
December 19, 2005, Parent and Company and their representatives engaged in
negotiations on the terms of the tender offer/merger agreement. The Company also
provided the Parent with financial and legal due diligence during such period.
On December 17, 2005, representatives of Newcastle and Steel met with
certain members of management of the Company and discussed possible terms for a
negotiated and definitive tender offer/merger agreement.
On December 19, 2005, Parent issued a press release announcing that as
a result of its due diligence review of information provided to it by the
Company that it has revised the purchase price per Share of the cash tender
offer it has previously announced that it intends to commence to purchase all of
the outstanding Shares of the Company not owned by it for $14.75 per share to
$14.50 per share. Parent also announced in the press release that it has entered
into discussions with the Company on the terms of a tender offer/merger
agreement.
On December 20, 2005, Parent announced that it had signed and delivered
in escrow a definitive tender offer/merger agreement (the "Merger Agreement") to
acquire all of the outstanding Shares of the Company not already owned by it for
$14.50 per share. The Merger Agreement was held in escrow pursuant to a letter
agreement (the "Escrow Letter") with the Company, pursuant to which the Company
agreed to execute and deliver the Merger Agreement before January 6, 2006,
unless prior to such time the Company's Board determined that the proposal
contemplated by the Merger Agreement does not constitute a superior offer or the
Company gave notice to Parent that the Company is unable to make the
representations and warranties or perform its obligations under the Merger
Agreement.
On December 20, 2005, the Company announced that its Board has
determined that Parent's offer to enter into a negotiated tender offer/merger
for $14.50 per share in cash is a superior offer to the existing $14.00 per
share offer of LLCP.
16
On December 22, 2005, Parent issued a press release announcing that it
has deferred the date it intends to commence the $14.50 per share cash tender
offer to acquire all of the outstanding Shares of the Company not already owned
by it and that it intends to commence the cash tender offer on or before
December 30, 2005. The deferral was made in light of the previous announcement
on December 20, 2005 by Parent that it has signed and delivered in escrow a
fully-negotiated Merger Agreement and the announcement on December 20, 2005 by
the Company that Parent's $14.50 per share offer is a superior offer to the
existing $14.00 per share offer of LLCP.
From December 22, 2005 to December 28, 2005, Parent continued its due
diligence review and discussions with the Company on the terms and timing of the
tender offer/merger agreement. On December 28, 2005, Parent issued a press
release announcing that it has increased the tender offer price to $15.50 per
share for its cash tender offer and that it intends to commence the cash tender
offer on or before January 6, 2006. Also on December 28, 2005, Parent delivered
to the Company an amendment to the Merger Agreement pursuant to which the
Company agreed to execute and deliver the Merger Agreement before January 13,
2006, unless prior to such time the Company's Board determined that the proposal
contemplated by the Merger Agreement does not constitute a superior offer or the
Company gave notice to Parent that the Company is unable to make the
representations and warranties or perform its obligations under the Merger
Agreement.
On December 30, 2005, the Company announced that it signed an Agreement
and Plan of Merger with an affiliate of LLCP for the acquisition of all of the
Company's outstanding Shares for an all cash price of $15.50 per Share. Under
the terms of the Agreement and Plan of Merger, the affiliate of LLCP has agreed
to commence a tender offer not later than January 6, 2006 to acquire all of the
Company's outstanding Shares at such price. The Company has agreed in the merger
agreement not to solicit alternative transactions. The Company is permitted to
respond to certain unsolicited proposals and may terminate the Agreement and
Plan of Merger upon receipt of a superior proposal for an alternative
transaction. Under certain circumstances, if the Company terminates the
Agreement and Plan of Merger for a superior proposal, the Company enters into an
agreement with respect to an alternative transaction within twelve months
following the termination of the Agreement and Plan of Merger, or the Company
withdraws or adversely modifies its recommendation of the offer, the Company
will be required to pay a $5 million fee to LLCP. In addition, the Company has
agreed to reimburse LLCP for its expenses in certain circumstances of up to $1
million. In connection with the execution of the Agreement and Plan of Merger
with LLCP, the Company notified Newcastle and Steel that their offer was no
longer a superior proposal and that the Company will not enter into the
previously announced proposed transaction.
On January 6, 2006, the Company filed a solicitation/recommendation
statement with the Securities and Exchange Commission on Schedule 14D-9
announcing (a) that the Company's Board of Directors (i) determined that the
Agreement and Plan of Merger entered into with an affiliate of LLCP and the
transactions contemplated thereby are fair to and in the best interests of the
Company and its stockholders, (ii) authorized and approved such Agreement and
Plan of Merger and related tender offer (the "LLCP Offer"), merger and other
transactions contemplated by such Agreement and Plan of Merger, (iii)
recommended that the Company's stockholders accept the LLCP Offer and tender
their shares of common stock of the Company to the offeror thereof pursuant to
the LLCP Offer and (iv) recommended that, if necessary, the Company's
stockholders adopt the Agreement and Plan of Merger entered into with an
affiliate of LLCP and approve the related merger and (b) that in light of the
advertisement of Newcastle and Steel of a competing, all cash offer of $15.50
per share which appeared in the January 6, 2006 New York Times, after reasonable
inquiry, to the best of the Company's knowledge, the executive officers and
directors of the Company have not yet decided whether they will tender shares of
common stock of the Company held of record or beneficially owned by such persons
to the offeror in the LLCP Offer.
On January 13, 2006, Parent issued a press release announcing that it
has increased its tender offer price to $15.75 per share.
On January 16, 2006, the Special Committee of the Company's Board met
and recommended that the Board determine that Parent's offer to enter into a
merger agreement providing for an offer price of $15.75 per share could
reasonably be expected to result in an offer superior to the $15.50 per share
tender offer pursuant to the LLCP Agreement and Plan of Merger. On January 16,
2006, pursuant to Section 4.8 of the LLCP Agreement and Plan of Merger, the
Company delivered a Notice of Receipt of Company Takeover Proposal (as defined
in the LLCP Agreement and Plan of Merger) to LLCP informing LLCP that the
Company had received an offer from Parent to enter into a tender offer/merger
17
agreement at a price of $15.75 per share and that the Board had determined that
this proposal could reasonably be expected to result in an offer superior to the
LLCP Agreement and Plan of Merger.
On January 17, 2006, at 9:30 a.m. (Eastern Standard Time), LLCP
submitted a new proposal to the Company raising its offer price to $16.00 per
share. LLCP also submitted a revised definitive merger agreement (the "Proposed
Amended LLCP Merger Agreement") in which (i) the cap for reimbursable expenses
was raised from $1 million to $2 million and (ii) the termination fee and
expense reimbursement obligations under the Proposed Amended LLCP Merger
Agreement would also be triggered in the event that a person acquired beneficial
ownership of or entered into an agreement or agreement in principle to acquire
beneficial ownership of 50% or more of the outstanding shares of Company common
stock. LLCP also informed the Company that it had obtained early termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976. LLCP's offer pursuant to the Proposed Amended LLCP Merger Agreement was
submitted on a confidential basis and provided the offer would expire upon the
earlier to occur of (i) 2:00 p.m. (Eastern Standard Time) on January 17, 2006,
or (ii) the adjournment of a meeting of the Board which had previously been
scheduled for 11:00 a.m. (Eastern Standard Time) that morning. After the Special
Committee reviewed and considered LLCP's $16.00 per share offer pursuant to the
Proposed Amended LLCP Merger Agreement, counsel for the Special Committee
informed LLCP that the Special Committee would recommend approval by the Board
of the Proposed Amended LLCP Merger Agreement, provided that the expense
reimbursement cap remained at $1 million. LLCP indicated that it was unwilling
to offer $16.00 per share without an increase in the expense reimbursement cap
to $2 million.
At approximately 11:00 a.m. (Eastern Standard Time) on January 17,
2006, LLCP informed counsel to the Special Committee that in order to provide
greater certainty of closing to the Company, it would eliminate the prior
closing condition regarding receipt of third party consents and approvals and
regulatory consents and approvals relating to state and local liquor license
matters. LLCP further indicated that in connection with this waiver it would
require that the minimum condition be amended to provide as a closing condition
that a majority of shares of Company common stock on a fully-diluted basis be
tendered and not withdrawn, and that the expense reimbursement cap be increased
to $2 million as proposed by LLCP. LLCP provided the Company with a new version
of the Proposed Amended LLCP Merger Agreement reflecting these changes.
On January 17, 2006, the Board unanimously authorized the execution and
delivery by the Company of the Proposed Amended LLCP Merger Agreement. The
Company, F&H Finance Corp., Fox Acquisition Company, and LLCP executed and
delivered the Amended LLCP Merger Agreement on the afternoon of January 17,
2006. The Company issued a press release announcing the execution of the Amended
LLCP Merger Agreement on the afternoon of January 17, 2006, and F&H Finance
Corp., Fox Acquisition Company and LLCP issued a press release announcing the
execution of the Amended LLCP Merger Agreement on the morning of January 18,
2006.
On January 20, 2006, Fox & Hound filed an amendment to its
solicitation/recommendation statement with the Securities and Exchange
Commission on Schedule 14D-9 with respect to the Schedule TO filed by LLCP
announcing (a) that Fox & Hound's Board of Directors (i) determined that the
Amended and Restated Agreement and Plan of Merger, dated January 17, 2006 (the
"Amended Merger Agreement"), and the transactions contemplated thereby,
including the revised tender offer (the "Revised LLCP Offer") and the Merger,
are fair to and in the best interests of the Company and its stockholders, (ii)
authorized and approved the Amended Merger Agreement, the Revised LLCP Offer,
the Merger and the other transactions contemplated by the Amended Merger
Agreement, (iii) recommended that the Company's stockholders accept the Revised
LLCP Offer and tender their shares of Company common stock to F&H Finance Corp.
pursuant to the Revised LLCP Offer and (iv) recommended that, if necessary, the
Company's stockholders adopt the Amended Merger Agreement and approve the Merger
and (b) that to the best of the Company's knowledge, each executive officer,
director, affiliate and subsidiary of the Company currently intends, subject to
compliance with applicable law, including Section 16(b) of the Exchange Act, to
tender all shares of common stock of the Company held of record or beneficially
owned by such person or entity to LLCP in the Revised LLCP Offer (other than
shares of common stock of the Company that such person or entity has the right
to purchase by exercising stock options).
On January 20, 2006, Fox & Hound filed a solicitation/recommendation
statement with the Securities and Exchange Commission on Schedule 14D-9 with
respect to the Schedule TO, as amended, filed by Parent and its affiliates
announcing (a) that Fox & Hound's Board of Directors recommended that the
stockholders of the Company reject the Purchaser's Offer and not tender their
shares of Company common stock to the Purchaser pursuant to its Offer and (b)
18
that in light of (i) LLCP's competing all cash tender offer of $16.00 per share
and (ii) the Board's recommendation, after due and reasonable inquiry, to the
best of the Company's knowledge, the executive officers and directors of the
Company currently intend not to tender shares of Company common stock held of
record or beneficially owned by such persons to the Purchaser in the Offer.
On January 26, 2006, Fox & Hound filed an amendment to its
solicitation/recommendation statement with the Securities and Exchange
Commission on Schedule 14D-9 with respect to the Schedule TO filed by LLCP, as
amended, indicating that the Board considered a number of factors including the
following in reaching its recommendation with respect to the Revised LLCP Offer:
(i) market price of Fox & Hound common stock, (ii) the current and historical
financial condition and results of operations of Fox & Hound, (iii) the
proposals contemplated by the Amended Merger Agreement constituted the best
acquisition proposal received by Fox & Hound at that time, (iv) alternative
strategic alternatives to increase stockholder value other than a sale of Fox &
Hound, (v) presentations from financial advisors, (vi) conditions to
consummation of the Revised LLCP Offer and (vii) and termination fee and expense
reimbursement provisions of the Amended Merger Agreement.
On January 26, 2006, Fox & Hound filed an amendment to its
solicitation/recommendation statement with the Securities and Exchange
Commission on Schedule 14D-9 with respect to the Schedule TO, as amended, filed
by us and our affiliates. This amendment indicates that in reaching its
recommendation with respect to our Offer, Fox & Hound's Board of Directors
considered a number of factors, including the following: (i) the Fox & Hound
Board of Directors considered LLCP's competing offer of $16.00 per share and
determined that $16.00 was more favorable than the $15.75 per share offer by
Parent and (ii) the Fox & Hound Board of Directors considered that the best
acquisition proposal received by Fox & Hound, specifically with respect to (a)
the purchase price to be paid per share of Fox & Hound common stock and (b) the
conditions required to be satisfied or waived in order to consummate the
transaction, was the Revised LLCP Offer, not our Offer.
On January 26, 2006, Parent issued a press release announcing (i) that
it has increased its tender offer price to $16.30 per share, (ii) that it has
extended its tender offer for all of the common stock of Fox & Hound not already
owned by it or its subsidiaries to 12:00 midnight, New York City time, on
Wednesday, February 8, 2006 and (iii) that it has decided to eliminate its
previous closing condition relating to receipt of regulatory approvals with
respect to liquor license matters.
On January 30, 2006, the Company and Parent issued separate press
releases announcing that the Company's Board has determined that Parent's offer
to enter into a negotiated tender offer/merger for $16.30 per share in cash is a
superior offer to the existing $16.00 per share offer of LLCP made pursuant to
LLCP's Amended Merger Agreement.
Also, on January 30, 2006, Parent signed and delivered in escrow a
definitive tender offer/merger agreement to acquire all of the outstanding
shares of common stock of the Company not already owned by it for $16.30 per
share (the "Escrowed Merger Agreement"). The Escrowed Merger Agreement was being
held in escrow pursuant to a letter agreement (the "January 30 Escrow Letter")
with Fox & Hound. Pursuant to the January 30 Escrow Letter, each of Parent, the
Purchaser, Newcastle and Steel irrevocably agreed that each party shall not
withdraw such party's agreement to the Escrowed Merger Agreement or otherwise
terminate such party's offer made to the Company as set forth in the Escrowed
Merger Agreement at any time prior to the earliest of (a) Midnight (Eastern
Standard Time) on February 2, 2006, (b) notification by the Company that the
Company is unable to make the representations and warranties or perform its
obligations in the Escrowed Merger Agreement, and (c) the Board of Directors of
the Company has determined that the proposal contemplated by the Escrowed Merger
Agreement no longer constitutes a superior offer. Pursuant to the January 30
Escrow Letter, the Company has agreed to use reasonable best efforts to cause
the execution and delivery of the Escrowed Merger Agreement within twenty-four
(24) hours after termination of LLCP's Amended Merger Agreement.
On February 1, 2006, the Company issued a press release announcing that
LLCP has informed the Company that it is not going to increase its offer price
or make any further offer to acquire the Company.
On February 2, 2006, the Company and Parent issued separate press
releases announcing that the Company has signed and delivered the definitive
tender offer/merger agreement with Parent and certain of its affiliates,
including us, to acquire all of the outstanding shares of common stock of Fox &
Hound not already owned by it for $16.30 per share and that the Company has
19
terminated the Amended Merger Agreement with LLCP. Parent also announced in its
press release that it has extended its tender offer for all of the common stock
of Fox & Hound not already owned by it or its subsidiaries to 12:00 Midnight,
New York City time, on Thursday, February 16, 2006.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; STATUTORY
REQUIREMENTS; APPROVAL OF THE MERGER; APPRAISAL RIGHTS.
PURPOSE OF THE OFFER; PLANS FOR THE COMPANY. The purpose of the Offer
is to acquire control of, and the entire equity interest in, the Company. The
Offer is being made pursuant to the Merger Agreement and is intended to
facilitate the acquisition of all of the Shares and increase the likelihood that
the Merger will be effected. The purpose of the Merger is to acquire all
outstanding Shares not purchased pursuant to the Offer. The transaction
structure includes the Merger in order to ensure the acquisition by Parent of
all the outstanding Shares.
If the Merger is consummated, Parent's common equity interest in Fox &
Hound would increase to 100% and Parent would be entitled to all the benefits
resulting from that interest. These benefits include complete management with
regard to the future conduct of Fox & Hound's business and any increase in its
value. Similarly, Parent will also bear the risk of any losses incurred in the
operation of Fox & Hound and any decrease in its value.
We currently intend, as soon as practicable after consummation of the
Offer, to seek maximum representation on the Company Board. We intend, promptly
after the consummation of the Offer, to request that some or all of the current
members of the Company Board resign and that our designees be elected to fill
the vacancies so created. Should such request be refused, we intend to take such
action as may be necessary and lawful to secure control of the Company Board.
In connection with this Offer, Parent has reviewed and will continue to
review various possible business strategies that it might consider in the event
that Purchaser acquires control of the Company, whether pursuant to the Offer or
otherwise. Following a review of additional information regarding the Company,
such changes could include, among other things, changes in the Company's
business, operations, personnel, employee benefit plans, corporate structure,
capitalization and management.
Parent, the Purchaser or an affiliate of Parent may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately negotiated transactions, a tender offer
or exchange offer or otherwise, upon such terms and at such prices as they will
determine, which may be more of less than the price paid in the Offer.
Except as described above or elsewhere in this Offer to Purchase, the
Purchaser has no present plans or proposals that would relate to or result in an
extraordinary corporate transaction involving the Company or any of its
subsidiaries (such as a merger, reorganization, liquidation, relocation of any
operations or sale or other transfer of a material amount of assets), any change
in the Company Board or management, any material change in the Company's
capitalization or dividend policy or any other material change in the Company's
corporate structure or business.
STATUTORY REQUIREMENTS; APPROVAL OF THE MERGER. Generally, under
Delaware Law, the approval of an affirmative vote of the holders of a majority
of the outstanding shares of common stock is required to adopt and approve a
merger agreement and subsequent merger of a company. The Special Committee of
the Fox & Hound Board has recommended to the Board that the Board approve the
Merger Agreement, the Offer and the Merger. Fox & Hound has represented in the
Merger Agreement that the execution and delivery of the Merger Agreement by Fox
& Hound and the consummation by Fox & Hound of the transactions contemplated
thereby, including the Offer and the Merger, have been duly and validly
authorized and approved by the Fox & Hound's Board and that such approval is
sufficient to render inapplicable to the Merger Agreement, the Merger, the Offer
and other transactions contemplated by the Merger Agreement the provisions of
Section 203 of the Delaware Law ("Section 203"). Fox & Hound has also
represented that no other corporate action is necessary by the Company or any of
its subsidiaries to authorize the execution or delivery of the Merger Agreement
and to consummate any transactions contemplated by the Merger Agreement, other
than a vote of the Company's stockholders to adopt the Merger Agreement in
accordance with the Delaware Law.
20
In addition, Fox & Hound has represented that, if required under
applicable law, the affirmative vote of the holders of a majority of the Shares
outstanding on the record date for the stockholders' meeting (called for the
purpose of adopting the Merger Agreement) is the only vote of the holders of any
class or series of the Company's capital stock necessary to adopt the Merger
Agreement, approve the Merger or consummate any of the other transactions
contemplated by the Merger Agreement. Therefore, unless the Merger is
consummated pursuant to the short form merger provisions under the Delaware Law
described below, the only remaining required corporate action of Fox & Hound
would be the approval of the Merger Agreement and the transactions contemplated
thereby by the affirmative vote of the holders of a majority of the Shares
outstanding.
Each of Parent and Fox & Hound have agreed to use their respective
commercially reasonable efforts to take, or cause to be taken, all actions
necessary to consummate the Offer and the Merger and make effective the other
transactions contemplated by the Merger Agreement. Under the Delaware Law and
the Company's Certificate of Incorporation, a merger of the Company would
require the approval of the Company Board and the holders of a majority of the
outstanding Shares. If we acquire, pursuant to the Offer or otherwise, at least
a majority of the outstanding Shares we would have sufficient voting power to
approve a merger of the Company without the affirmative vote of any other
stockholder of the Company. In addition, under Section 253 of the Delaware Law,
if we acquire, pursuant to the Offer or otherwise, at least 90% of the
outstanding Shares, we believe we would be able to approve the merger of the
Company without a vote of the Company Board or other stockholders. If we acquire
control of the Company, we currently intend that, prior to the acquisition of
the entire equity interest in the Company, no dividends will be declared on the
Shares. Parent presently intends to effect a short form merger if permitted to
do so under the Delaware Law.
"GOING PRIVATE" TRANSACTIONS. The SEC has adopted Rule 13e-3,
promulgated under the Exchange Act ("Rule 13e-3"), which is applicable to
certain "going private" transactions and which may under certain circumstances
be applicable to the Merger or another business combination following the
purchase of Shares pursuant to the Offer in which Purchaser seeks to acquire the
remaining Shares not held by it. However, Rule 13e-3 would not be applicable if:
(1) the Shares are deregistered under the Exchange Act prior to the Merger or
other business combination or (2) the Merger or other business combination is
consummated within one year after the purchase of the Shares pursuant to the
Offer and the amount paid per Share in the Merger or other business combination
is at least equal to the per-share amount in the Offer. Purchaser believes that
Rule 13e-3 will not be applicable to the Merger because it is anticipated that
the Merger will be effectuated within one year following the consummation of the
Offer and, in the Merger, stockholders will receive the same price per Share as
paid in the Offer. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning Fox & Hound and certain information
relating to the fairness of the proposed transaction and the consideration
offered to minority stockholders be filed with the SEC and disclosed to
stockholders prior to consummation of the transaction.
APPRAISAL RIGHTS. You do not have appraisal rights as a result of the
Offer. However, if a merger involving the Company is consummated, stockholders
of the Company who have neither voted in favor of the merger nor consented
thereto in writing, and who otherwise under the Delaware Law comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of such merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest, if any (all such Shares collectively, the "Dissenting Shares"). Any
such judicial determination of the fair value of the Dissenting Shares could be
based upon considerations other than or in addition to the price paid in the
Offer and the market value of the Shares. Stockholders should recognize that the
value so determined could be higher or lower than the price per Share paid
pursuant to the Offer or the consideration paid in such a merger. Moreover, we
may argue in an appraisal proceeding that, for purposes of such a proceeding,
the fair value of the Dissenting Shares is less than the price paid in the
Offer.
If any holder of Shares who demands appraisal under Section 262 of the
Delaware Law fails to perfect, or effectively withdraws or loses his rights to
appraisal as provided in the Delaware Law, the Shares of such stockholder will
be converted into the right to receive the price per Share paid in the Offer. A
stockholder may withdraw his demand for appraisal by delivering to us a written
withdrawal of his demand for appraisal and acceptance of the merger.
Failure to follow the steps required by Section 262 of the Delaware Law
for perfecting appraisal rights may result in the loss of such rights.
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THE FOREGOING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE DELAWARE
LAW OR U.S. FEDERAL LAW AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DELAWARE LAW AND APPLICABLE U.S. FEDERAL LAW.
13. THE TRANSACTION DOCUMENTS.
THE MERGER AGREEMENT.
The following is a summary of the material provisions of the Merger
Agreement, a copy of which has been filed as an exhibit to the Schedule TO, as
amended. This summary is qualified in its entirety by reference to the Merger
Agreement, which is incorporated by reference herein. Capitalized terms used
herein and not otherwise defined in this subsection "Merger Agreement" of this
Section 13 have the meanings ascribed to them in the Merger Agreement.
MERGER. The Merger Agreement provides that after the purchase of the
Shares pursuant to the Offer, as soon as practicable after the approval and
adoption of the Merger Agreement by the stockholders of the Company, to the
extent required by the DGCL, and the satisfaction or waiver, if possible, of
certain other conditions contained in the Merger Agreement, and in no event
later than three business days after such satisfaction or waiver, the Purchaser
will be merged with and into the Company, with the Company continuing as the
Surviving Corporation in the Merger under the corporate name it possesses
immediately prior to the Merger.
CONVERSION OF SECURITIES. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior thereto
(other than Shares held in the treasury of the Company or owned by Parent or the
Purchaser, which shall automatically be cancelled and retired) will
automatically be cancelled and, other than Shares with respect to which
appraisal rights are properly exercised, will be converted into and become a
right to receive the Offer Price in cash upon the surrender of the certificate
formerly representing such Share. Each share of common stock of the Purchaser
issued and outstanding immediately prior to the Effective Time shall, at the
Effective Time, by virtue of the Merger and without any action on the part of
the Purchaser, the Company or the holders of Shares, be converted into and shall
thereafter evidence one validly issued fully paid and nonassessable share of
common stock of the Surviving Corporation.
TREATMENT OF STOCK OPTIONS. The Merger Agreement provides that, with
respect to all outstanding Company Options granted under the Company Option
Plans or otherwise, at the Effective Time, subject to the terms and conditions
set forth in this subsection, each holder of a Company Option will be entitled
to receive from the Company, and shall receive, in settlement of each Company
Option a cash amount (the "Cash Amount") equal to the net amount of (i) the
product of (A) the excess, if any, of $16.30 over the exercise price per share
of such Company Option at the Effective Time, multiplied by (B) the number of
shares subject to such Company Option, less (ii) any applicable withholdings for
Taxes. If the exercise price per share of any Company Option equals or exceeds
$16.30, the Cash Amount therefor shall be zero. Notwithstanding the foregoing,
(i) payment of the Cash Amount is subject to written acknowledgement, in a form
acceptable to the Surviving Corporation, that no further payment is due to such
holder on account of any Company Option and all of such holder's rights under
such Company Options have terminated and (ii) with respect to any person subject
to Section 16(a) of the Exchange Act, any Cash Amount to be paid to such person
in accordance with the termination of his or her Company Option shall be paid as
soon as practicable after the payment can be made without liability to such
person under Section 16(b) of the Exchange Act. The Merger Agreement further
provides that, as of the Effective Time, except as provided in this subsection,
all rights under any Company Option and any provision of the Company Option
Plans and any other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the Company shall
be cancelled. The Company has agreed to use commercially reasonable efforts to
ensure that, as of and after the Effective Time, except as provided in this
subsection, no person shall have any right under the Company Option Plans or any
other plan, program or arrangement with respect to securities of the Company,
the Surviving Corporation or any subsidiary thereof. The Company has also agreed
in the Merger Agreement to use commercially reasonable efforts to cause to be
effected any necessary amendments to the Company Option Plans and any other
resolutions, consents or notices, in such form reasonably acceptable to Parent,
required under the Company Option Plans or any Options to give effect to the
foregoing.
CONDITIONS TO OBLIGATIONS OF ALL PARTIES TO MERGER AGREEMENT. The
obligations of each of the parties to effect the Merger are subject to the
following conditions:
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(i) if required under the DGCL, the Merger shall have been approved and
adopted by the vote of the stockholders of the Company;
(ii) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered,
promulgated or enforced by any court or other Governmental Authority since
the date of the Merger Agreement, which prohibits or prevents the
consummation of the Merger and which has not been vacated, dismissed or
withdrawn prior to the Effective Time. The Company and Parent shall use
their commercially reasonable efforts to have any of the foregoing vacated,
dismissed or withdrawn by the Effective Time;
(iii) Parent or the Purchaser or any affiliate of either of them shall
have purchased Shares pursuant to the Offer that together with shares
otherwise owned by Parent and its affiliates, including the Purchaser,
represent at least the Minimum Condition; and
(iv) any Subsequent Offering Period shall have expired.
SCHEDULE 14D-9. On January 20, 2006, the Company filed with the
Commission a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") with respect to the Offer. In the Merger Agreement, the
Company has agreed to amend as promptly as reasonably practicable after the date
of the Merger Agreement the Schedule 14D-9 to reflect the terms of the Offer, as
set forth in the Merger Agreement, which amendment, subject to the exceptions
set forth below under "Nonsolicitation Obligations and Exceptions," shall
contain the recommendation of the Special Committee of the Board of Directors
and of the Board of Directors that the Company's stockholders accept the Offer,
tender their Shares in the Offer and, if necessary, adopt the Merger Agreement.
The Company has further agreed to take all steps necessary to disseminate to the
stockholders such Schedule 14D-9 as and to the extent required by applicable
federal securities laws.
BOARD OF DIRECTORS. The Merger Agreement provides that, immediately
upon the purchase of and payment for Shares by the Purchaser or any of its
affiliates pursuant to the Offer following satisfaction of the Minimum
Condition, (i) Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors as is equal to
the product obtained by multiplying the total number of directors on such Board
by the percentage that the number of Shares so purchased and paid for bears to
the total number of Shares then outstanding, but in no event less than a
majority of the number of directors and (ii) the Company and its Board of
Directors shall, upon request of the Purchaser, immediately increase the size of
the Board, secure the resignations of such number of directors or remove such
number of directors, or any combination of the foregoing, as is necessary to
enable Parent's designees to be so elected to the Company's Board and shall
cause Parent's designees to be so elected. The Company is also obligated to
comply with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in connection with the matters described in this section, including
mailing to stockholders together with the Schedule 14D-9 the information
required by such Section 14(f) and Rule 14f-1 as is necessary to enable Parent's
designees to be elected to the Board. Parent and the Purchaser will supply the
Company and be solely responsible for any information with respect to them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1.
Notwithstanding the foregoing, pursuant to the Merger Agreement, the
Company is obligated to use its commercially reasonable efforts to assure that
there shall be until the Effective Time at least two of the members of the Board
who are directors on the date hereof and are not employees of the Company (each
a "Continuing Director"). The Continuing Directors as a group shall be entitled
to retain independent legal counsel at Company expense if and to the extent that
issues are presented to them that involve a conflict of interest for Company
counsel. If at any time prior to the Effective Time there shall be in office
only one Continuing Director for any reason, the Board shall be entitled to
appoint a person who is not an officer or employee of the Company or any
subsidiary designated by the remaining Continuing Director to fill such vacancy
(and such person shall be deemed to be a Continuing Director for all purposes of
the Merger Agreement), and if at any time prior to the Effective Time no
Continuing Directors then remain, the other directors of the Company then in
office shall use their commercially reasonable efforts to designate two persons
to fill such vacancies who are not officers or employees or affiliates of the
Company, its subsidiaries, Parent or the Purchaser or any of their respective
affiliates.
23
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company
has made customary representations and warranties to Parent and the Purchaser,
including, but not limited to, representations and warranties relating to the
Company's organization and qualification, the Company's subsidiaries,
capitalization and authority to enter into the Merger Agreement and carry out
the transactions contemplated thereby, required Consents, Company SEC Reports
(including financial statements), the absence of certain material adverse
changes or events since September 6, 2005, Litigation, the material liabilities
of the Company and its subsidiaries, environmental matters relating to the
Company and its subsidiaries, Company Employee Plans, labor matters, the
documents supplied by the Company relating to the Offer, Company Intellectual
Property, the payment of Taxes, arrangements with financial advisors, the
absence of Affiliate Transactions, the fairness opinions delivered to it in
connection with the transactions contemplated by the Merger Agreement and title
to its property.
Parent and the Purchaser have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties relating to Parent's and the Purchaser's organization and
qualification, their authority to enter into the Merger Agreement and consummate
the transactions contemplated thereby, required Consents, documents related to
the Offer, the availability of sufficient financing to consummate the Offer and
the absence of any prior activities by Parent and the Purchaser.
CONDUCT OF COMPANY'S BUSINESS PENDING MERGER. Pursuant to the Merger
Agreement, the Company has agreed that, prior to the Effective Time, unless the
Purchaser shall otherwise have agreed in writing or as otherwise expressly
contemplated or permitted by the Merger Agreement, the Company will do the
following:
(i) conduct the business of the Company and its subsidiaries in the
ordinary course and consistent with past practice;
(ii) use its commercially reasonable efforts to preserve intact its
business organizations, to keep available the services of it and its
subsidiaries' officers and employees, to maintain satisfactory
relationships with all persons with whom it and its subsidiaries do
business, and to preserve the possession, control and condition of all of
its and its subsidiaries' assets;
(iii) provide Parent and its representatives reasonable access to all
offices and other facilities and to all contracts, agreements, commitments,
books and records of or pertaining to the Company and its subsidiaries and
promptly furnish Parent with (A) such financial and operating data and
other information with respect to the business and properties of the
Company and its subsidiaries as Parent may from time to time reasonably
request and (B) a copy of each material document filed or received by the
Company pursuant to the requirements of applicable securities laws or the
Nasdaq;
(iv) use its commercially reasonable efforts to comply in all material
respects with all Laws applicable to it or any of its properties, assets or
business and maintain in full force and effect all the Company Permits
necessary for, or otherwise material to, such business; and
(v) notify Parent of any of the following that occur after the date of
the Merger Agreement: (A) a material failure of the Company or any of its
representatives to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it or them under the Merger
Agreement; (B) the receipt of any notice or other communication in writing
from any third party alleging that the Consent of such third party is or
may be required in connection with the transactions contemplated by the
Merger Agreement, provided that such Consent would have been required to
have been disclosed in the Merger Agreement; (C) the receipt of any
material notice or other communication from any Governmental Authority
(including, but not limited to, the NASD or any securities exchange) in
connection with the transactions contemplated by the Merger Agreement; (D)
the occurrence of an event which would reasonably be expected to have a
Company Material Adverse Effect or that would otherwise reasonably be
expected to cause a condition to the Merger or the Offer not to be
satisfied; or (E) the commencement or threat of any Litigation involving or
affecting the Company or any of its subsidiaries, or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as such, of the Company or any
of its subsidiaries which, if pending on the date hereof, would have been
required to have been disclosed in the Merger Agreement or which relates to
the consummation of the Offer or the Merger.
24
The Company has also agreed pursuant to the Merger Agreement that,
prior to the Effective Time, unless the Purchaser shall otherwise have agreed in
writing or as otherwise expressly contemplated or permitted by the Merger
Agreement, it will not directly or indirectly do, or permit the occurrence of,
any of the following:
(i) amend or propose to amend its Certificate of Incorporation or
Bylaws (or comparable governing instruments);
(ii) except pursuant to rights under the Options, authorize for
issuance, issue, grant, sell, pledge, dispose of or propose to issue,
grant, sell, pledge or dispose of any shares of, or any options, warrants,
commitments, subscriptions or rights of any kind to acquire or sell any
shares of, its capital stock or other securities or any Voting Debt
including, but not limited to, any securities convertible into or
exchangeable for shares of stock of any class, except for the issuance of
Shares pursuant to the exercise of stock options outstanding on the date of
the Merger Agreement in accordance with their present terms;
(iii) split, combine or reclassify any shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or directly or indirectly redeem, purchase or otherwise
acquire or offer to acquire any shares of its capital stock or other
securities and other than dividends and distributions to the Company or one
of its wholly-owned subsidiaries;
(iv) which consent shall not be unreasonably withheld or delayed, (A)
create, incur, assume, forgive or make any changes to the terms or
collateral of any debt, receivables or employee or officer loans or
advances, except in the ordinary course of business or incurrences that
constitute refinancing of existing obligations on terms that are no less
favorable to the Company than the existing terms; (B) except in accordance
with the Capex Budgets or in the ordinary course of business assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, indirectly, contingently or otherwise) for the obligations of any
person; (C) except in the ordinary course of business, make any capital
expenditures or incur any preopening expenses; (D) make any loans, advances
or capital contributions to, or investments in, any other person (other
than customary travel, relocation or business advances to employees); (E)
acquire the stock or assets of, or merge or consolidate with, any other
person; (F) voluntarily incur any material liability or obligation
(absolute, accrued, contingent or otherwise) other than in the ordinary
course of business consistent with past practice; or (G) sell, transfer,
mortgage, pledge, or otherwise dispose of, or encumber, or agree to sell,
transfer, mortgage, pledge or otherwise dispose of or encumber, any assets
or properties (real, personal or mixed) material to the Company other than
to secure debt permitted under subclause (A) of this clause (iv) or other
than in the ordinary course of business consistent with past practice;
(v) which consent shall not be unreasonably withheld or delayed,
increase in any manner the wages, salaries, bonus, compensation or other
benefits of any of its officers or employees or enter into, establish,
amend or terminate any employment, consulting, retention, change in
control, collective bargaining, bonus or other incentive compensation,
profit sharing, health or other welfare, stock option or other equity,
pension, retirement, vacation, severance, termination, deferred
compensation or other compensation or benefit plan, policy, agreement,
trust, fund or other arrangement with, for or in respect of, any
stockholder, officer, director, other employee, agent, consultant or
affiliate other than as required pursuant to the terms of agreements in
effect on the date of the Merger Agreement or in the ordinary course of
business consistent with past practice with employees (other than officers)
of the Company or any of its subsidiaries or enter into or engage in any
agreement, arrangement or transaction with any of its directors, officers,
employees or affiliates except current compensation and benefits in the
ordinary course of business, consistent with past practice;
(vi) which consent shall not be unreasonably withheld or delayed, (A)
except in the ordinary course of business, commence any litigation or other
proceedings with any Governmental Authority or other person, or (B) make or
rescind any election relating to Taxes, settle any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, file any amended Tax Return or claim for refund, change
any method of accounting or make any other material change in its
accounting or Tax policies or procedures if such action could reasonably be
expected to materially increase the Tax liability of the Surviving
Corporation or any of its subsidiaries for any period ending after the
Effective Time;
25
(vii) adopt or amend any resolution or agreement concerning
indemnification of its directors, officers, employees or agents;
(viii) transfer or license to any person or entity or otherwise extend,
amend, modify, permit to lapse or fail to preserve any of the Company
Intellectual Property material to the Company's or its subsidiaries'
business as presently conducted or proposed to be conducted, other than
nonexclusive licenses in the ordinary course of business consistent with
past practice, or disclose to any person who has not entered into a
confidentiality agreement any Trade Secrets;
(ix) modify, amend or terminate any Company Material Contract, or
waive, release or assign any material rights or claims thereunder, other
than any such modification, amendment or termination of any such Company
Material Contract or any such waiver, release or arrangement thereunder in
the ordinary course of business consistent with past practice;
(x) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality agreement or
non-competition agreement to which the Company or its subsidiaries is a
party;
(xi) fail to maintain its books, accounts and records in the usual
manner on a basis consistent with that heretofore employed;
(xii) establish any subsidiary except in the ordinary course of
business or enter into any new line of business;
(xiii) which consent shall not be unreasonably withheld or delayed,
enter into any lease, contract or agreement pursuant to which the Company
or any of its subsidiaries is obligated to pay or incur obligations of more
than $150,000 per year, other than leases contemplated in connection with
the Capex Budgets or other leases, contracts or agreements in the ordinary
course of business consistent with past practice;
(xiv) permit any material insurance policy naming the Company or any of
its subsidiaries as a beneficiary or a loss payee to be cancelled or
terminated without notice to and consent (which shall not be unreasonably
withheld or delayed) by Parent, unless the Company uses commercially
reasonable efforts to maintain substantially similar insurance coverage as
is currently in place;
(xv) revalue any of its assets or make any change in accounting
methods, principles or practices, except as required by generally accepted
accounting principles;
(xvi) fail to make in a timely manner any filings with the Commission
required under the Securities Act or the Exchange Act or the rules and
regulations promulgated thereunder;
(xvii) discharge any obligations (including accounts payable) other
than on a timely basis in the ordinary course of business consistent with
past practice, or materially delay the making of any capital expenditures
from the Capex Budgets;
(xviii) close or materially reduce the Company's or any subsidiary's
activities, or effect any layoff or other Company-initiated personnel
reduction or change, at any of the Company's or any subsidiary's
facilities; or
(xix) authorize any of, or agree to commit to do any of, the foregoing
actions.
NONSOLICITATION OBLIGATIONS AND EXCEPTIONS. The Company has represented
in the Merger Agreement that it has terminated discussions with all persons
(other than Parent and the Purchaser) that relate to any Company Takeover
Proposal (as defined below), and, except as permitted by the other provisions
set forth in this section "Nonsolicitation Obligations and Exceptions," will not
participate in any discussions with any person (other than Parent and the
Purchaser) that relate to any Company Takeover Proposal. The Company has agreed
in the Merger Agreement (except as set forth below) that it will not, directly
or indirectly, and shall not, directly or indirectly, authorize or permit any
officer or director of the Company, or authorize or knowingly permit any other
employee, agent or consultant of the Company to, (i) solicit, encourage,
initiate or seek the making, submission or announcement of any Company Takeover
26
Proposal, (ii) furnish any non-public information regarding the Company to any
person (other than Parent or the Purchaser or their representatives) in
connection with or in response to a Company Takeover Proposal or an inquiry that
the Company believes in good faith could be expected to lead to a Company
Takeover Proposal, (iii) engage in discussions or negotiations with any person
with respect to any Company Takeover Proposal, except as to the existence of
these provisions, (iv) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Parent, the approval or recommendation by the
Board of the Offer, the Merger Agreement or the Merger, (v) approve or
recommend, or propose publicly to approve or recommend, any Company Takeover
Proposal or (vi) cause the Company to enter into any letter of intent, agreement
in principle, acquisition agreement or other similar agreement related to any
Company Takeover Proposal.
Notwithstanding the foregoing, nothing in the Merger Agreement
prohibits or limits (A) the Company, or the Board, prior to the time of the
first acceptance of Shares for payment pursuant to the Offer, from furnishing
nonpublic information regarding the Company to, or entering into discussions or
negotiations with, any person in response to an unsolicited, bona fide written
Company Takeover Proposal that the Board concludes in good faith could
reasonably be expected to result in a Company Superior Offer (as defined below)
being submitted to the Company by such person (and not withdrawn) if (1) the
Company has not violated any of the restrictions in the preceding paragraph in
connection with the receipt of such Company Takeover Proposal, (2) the Board
concludes in good faith, after consultation with its outside legal counsel, that
such action with respect to such Company Takeover Proposal is in the best
interest of the Company's stockholders, (3) the Company receives from such
person an executed confidentiality agreement with provisions not substantially
more favorable to such person than those contained in the Confidentiality
Agreement (as defined below); and (4) the Company furnishes such nonpublic
information to such person and to Parent at substantially the same time (to the
extent such nonpublic information has not been previously furnished by the
Company to Parent); or (B) the Company from complying with Rules l4d-9 and 14e-2
promulgated under the Exchange Act with regard to any Company Takeover Proposal.
Under the Merger Agreement, "Company Takeover Proposal" means any
inquiry, proposal or offer from any third party relating to (1) any direct or
indirect acquisition or purchase of assets representing 20% or more of the
assets of the Company, (2) any issuance, sale, or other disposition of
(including by way of merger, consolidation, business combination, share
exchange, joint venture, or any similar transaction) securities (or options,
rights or warrants to purchase, or securities convertible into or exchangeable
for, such securities) representing 20% or more of the voting power of the
Company, (3) any tender offer, exchange offer or other transaction in which, if
consummated, any person shall acquire beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which beneficially owns or has the right to acquire
beneficial ownership, of 20% or more of the outstanding voting capital stock of
the Company, or (4) any merger, consolidation, share exchange, business
combination, recapitalization, liquidation or dissolution involving the Company.
Further, under the Merger Agreement, a "Company Superior Offer" means a
Company Takeover Proposal on terms that the Board determines, in good faith,
based upon consultations with its outside legal counsel and its financial
advisor, that if consummated, is more favorable to the Company's stockholders
than the Offer, the Merger Agreement or the Merger and is reasonably likely to
be consummated, taking into account all legal, financial and regulatory aspects
of the offer and the person making the offer and would, if consummated, be in
the best interests of the stockholders of the Company.
The Company has agreed promptly (and in no event later than forty-eight
(48) hours after the Company receives any Company Takeover Proposal or any
request for nonpublic information relating to a Company Takeover Proposal), to
advise Parent orally and in writing of such Company Takeover Proposal or request
that is made or submitted by any person during the time prior to the Effective
Time (including providing the identity of the person making or submitting such
Company Takeover Proposal or request, and a summary of the material terms
thereof, if the Company Takeover Proposal or request is not in writing, or a
copy of the Company Takeover Proposal or request and any related draft
agreements if it is in writing). The Company shall keep Parent reasonably
informed in all material respects with respect to the status of any such Company
Takeover Proposal or request and any material modification or proposed material
modification thereto, any request for or intention to furnish nonpublic
information, or its intention to enter into discussions with any third party
regarding a potential Company Takeover Proposal pursuant to the terms hereof.
27
The Company has agreed not to release any third party from or waive any
provision of any confidentiality or similar agreement to which the Company is a
party and which relates to a Company Takeover Proposal, and will use its
commercially reasonable efforts to enforce each such agreement at the request of
Parent.
Notwithstanding the foregoing, the Board is permitted at any time prior
to the first acceptance of Shares for payment pursuant to the Offer (subject to
the Company's compliance with the provisions of the Merger Agreement) to, (x)
withdraw or modify its approval or recommendation of the Offer, the Merger
Agreement or the Merger or (y) approve or recommend a Company Superior Offer if:
(A) an unsolicited, bona fide written offer is made to the Company by a third
party for a Company Takeover Proposal, and such offer is not withdrawn; (B) the
Board determines in good faith, after consultation with its financial advisor,
that such offer constitutes a Company Superior Offer; (C) following consultation
with outside legal counsel, the Board or a committee of disinterested directors
determines that the withdrawal or modification of its approval or recommendation
of the Offer, the Merger Agreement or the Merger is required to comply with the
fiduciary duties of the Board to the stockholders of the Company under
applicable Law; (D) such approval or recommendation is not withdrawn or modified
in a manner adverse to Parent at any time prior to three (3) business days after
Parent receives written notice from the Company confirming that the Board has
determined that such offer is a Company Superior Offer; and (E) at the end of
such three (3) business day period, after taking into account any adjustment or
modification of the terms of the Merger Agreement proposed by Parent (and any
adjustment or modification of the terms of such Company Takeover Proposal), the
Board again makes the determination in good faith that the withdrawal or
modification of such approval or recommendation of the Offer, the Merger
Agreement or the Merger is required to comply with the fiduciary duties of the
Board to the stockholders of the Company under applicable Law.
INDEMNIFICATION; INSURANCE. The parties to the Merger Agreement have
agreed that, for a period of six years after the Effective Time, the Certificate
of Incorporation of the Surviving Corporation shall contain provisions no less
favorable with respect to indemnification than the provisions set forth in the
Bylaws and the Certificate of Incorporation of the Company. Also, the Surviving
Corporation shall maintain in full force and effect, for a period of at least
six years from the Effective Time, directors' and officers' liability insurance
comparable to the Company's current policy, provided that the maximum amount to
be spent on such policies shall not exceed the greater of (i) $350,000 and (ii)
such amount as is necessary to obtain $10,000,000 of coverage.
EXISTING EMPLOYMENT AGREEMENTS AND BENEFITS. The Merger Agreement
provides that Parent will cause the Surviving Corporation to honor all
employment and severance agreements in effect prior to the date of the Merger
Agreement between the Company or any of its subsidiaries and any current or
former employee or director of the Company and disclosed in the disclosure
schedules to the Merger Agreement. Also, the parties to the Merger Agreement
have agreed to certain provisions to provide for the continued coverage of the
employees of the Company and its subsidiaries under benefits plans.
TERMINATION. The Merger Agreement may be terminated at any time prior
to the first acceptance of Shares for payment pursuant to the Offer:
(i) by mutual consent of the Boards of Directors of Parent and the
Company;
(ii) by either Parent or the Company if the Offer shall not have been
consummated on or before May 31, 2006; PROVIDED, HOWEVER, that the right to
terminate the Merger Agreement pursuant to such provision shall not be
available to any party whose failure to fulfill any obligation under the
Merger Agreement has been the cause of, or resulted in, the failure of the
Offer to be consummated on or before such date;
(iii) by either Parent or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any legally
binding injunction, order, decree or ruling (whether temporary, preliminary
or permanent) or taken any other action (including the failure to have
taken an action) which has become final and non-appealable and has the
effect of making consummation of the Merger illegal or otherwise preventing
or prohibiting consummation of the Merger;
(iv) by Parent, if neither Parent nor the Purchaser is in material
breach of its obligations under the Merger Agreement, and if (A) any of the
representations and warranties of the Company herein become untrue or
inaccurate such that the Offer Condition regarding the Company's
representations and warranties would not be satisfied, or (B) there has
been a breach on the part of the Company of any of its covenants or
agreements herein such that the Offer Condition regarding the Company's
28
performance of its obligations under, and compliance with, the Merger
Agreement would not be satisfied, and such breach (if curable) has not been
cured within twenty (20) days after notice to the Company;
(v) by the Company, if the Company is not in material breach of its
obligations under the Merger Agreement, and if (A) any of the
representations and warranties of Parent or the Purchaser herein become
untrue or inaccurate, except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "Material Adverse Effect" set forth
therein) would not be reasonably expected to have a Purchaser Material
Adverse Effect on the date of the Merger Agreement and as of the expiration
of the Offer, as if made at and as of such date (except to the extent
expressly made as of an earlier date, in which case as of such date), or
(B) either Parent or the Purchaser shall have failed to perform in any
material respect its obligations or to comply in any material respect with
its agreements or covenants to be performed or complied with by it under
the Merger Agreement, and such breach (if curable) has not been cured
within twenty (20) days after notice to Parent or the Purchaser, as the
case may be;
(vi) by Parent, if the Board shall have (i) withdrawn or modified in a
manner adverse to Parent the approval or recommendation of the Offer, the
Merger Agreement and the Merger, (ii) recommended or approved any Company
Takeover Proposal, or (iii) entered into or publicly announced the
Company's intention to enter into an agreement other than a confidentiality
agreement with respect to a Company Takeover Proposal; or
(vii) by the Company, if the Board shall have withdrawn or modified in
a manner adverse to Parent the approval or recommendation of the Offer, the
Merger Agreement and the Merger in accordance with the terms of the Merger
Agreement, but only (A) after providing written notice to Parent (a "Notice
of Superior Offer") advising Parent that the Board has received a Company
Superior Offer, specifying the material terms and conditions of such
Company Superior Offer and identifying the person making such Company
Superior Offer, and (B) if Parent does not, within three (3) business days
of Parent's receipt of the Notice of Superior Offer, make an offer that the
Board determines, in its good faith judgment (after consultation with its
advisors), to be at least as favorable to the Company's stockholders as the
Superior Proposal; PROVIDED that during such three business day period, the
Company shall negotiate in good faith with Parent (to the extent Parent
wishes to negotiate) to enable Parent to make such an offer; PROVIDED,
HOWEVER, that any such purported termination pursuant to this provision
shall be void and of no force or effect unless the Company concurrently
with such termination pays to Parent the Company Termination Fee and the
Termination Expenses (each as defined below under "Expenses; Termination
Fee"); and PROVIDED FURTHER that Parent and Merger Sub acknowledge and
agree that concurrently with such termination the Company may enter into a
definitive agreement providing for implementation of such Company Superior
Offer.
If the Merger Agreement is so terminated, the Merger Agreement will
become void and there will be no liability on the part of any party to the
Agreement, except (i) as described under "Expenses; Termination Fee" and with
respect to certain confidentiality obligations, and (ii) to the extent that such
termination results from the willful breach by a party of any of its
representations, warranties, covenants or agreements set forth in the Merger
Agreement.
EXPENSES; TERMINATION FEE. The Merger Agreement provides that all
Expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such Expenses, except
that each of the Company and Parent shall pay one-half of the filing fee in
connection with the filing by the Company and Parent under the Hart-Scott-Rodino
Act and except that, if the Merger Agreement is terminated:
(i) by Parent as set forth in subparagraph (iv) under "Termination"
above, then the Company agrees to pay Parent the Termination Expenses (as
defined below) and if, concurrently with such termination or within 12
months of the date of termination, the Company enters into, or submits to
the stockholders of the Company for adoption, an agreement with respect to
a Company Takeover Proposal, or a Company Takeover Proposal is consummated,
then the Company agrees to also pay Parent the Company Termination Fee (as
defined below);
29
(ii) by Parent as set forth in subparagraph (vi) under "Termination"
above, then (so long as neither Parent nor the Purchaser was in material
breach of any of its representations, warranties or covenants in the Merger
Agreement as of the termination date), the Company agrees to pay Parent the
Company Termination Fee and the Termination Expenses; or
(iii) by the Company as set forth in subparagraph (vii) under
"Termination" above, then the Company agrees to pay Parent the Company
Termination Fee and the Termination Expenses.
The "Company Termination Fee" means an amount equal to $5,000,000.
"Termination Expenses" means an amount, not to exceed $1,000,000, equal to the
reasonably documented Expenses of Parent and the Purchaser incurred in
connection with or related to the Merger Agreement and the other matters
contemplated thereby. If the Company fails to pay Parent the Company Termination
Fee or any Termination Expenses when due, the Company shall reimburse Parent for
all reasonable costs and expenses actually incurred or accrued by Parent in
connection with the collection of such amounts. Parent's right to receive
payment of the Company Termination Fee and Termination Expenses is the exclusive
remedy of Parent and the Purchaser for the loss suffered as a result of the
failure to be consummated of the Merger and the other transactions contemplated
by the Merger Agreement.
CONSENT OF CONTINUING DIRECTORS TO TERMINATION, MODIFICATION, AMENDMENT
OR WAIVER. If the Purchaser's designees are elected to the Company's Board of
Directors, after the acceptance for purchase of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of a majority of the directors
of the Company then in office who were neither designated by Parent nor are
employees of the Company will be required for (i) any amendment or termination
of the Merger Agreement on behalf of the Company, (ii) any extension or waiver
by the Company of the time for the performance of any of the obligations or
other acts of Parent or the Purchaser under the Merger Agreement or (iii) any
waiver of any of the Company's rights under the Merger Agreement or any other
action that could adversely affect in any material respects the rights of the
Company's stockholders under the Merger Agreement.
SPONSORS GUARANTEE. The Sponsors have guaranteed all obligations of
Parent and the Purchaser under the Merger Agreement.
CONFIDENTIALITY AGREEMENT
In connection with granting Parent and its representatives access to
certain confidential information of the Company, Parent, Newcastle and Steel
executed a Confidentiality Agreement with the Company, dated December 13, 2005
(the "Confidentiality Agreement"). Pursuant to the Confidentiality Agreement,
and in consideration of the Company's agreeing to make certain confidential
information (the "Evaluation Material") available to Parent, Newcastle and
Steel, Parent, Newcastle and Steel agreed that: (A) except as required by
discovery demand, legal proceeding or other similar process, all Evaluation
Material would be held in confidence and used solely for the purpose of
evaluating a possible transaction with the Company (the "Transaction") except
for disclosures to their officers, employees, affiliates and other agents
("Affiliates") who need access to the Evaluation Material for purposes of
evaluating a Transaction and who have been informed of the confidential nature
of the Evaluation Material and agreed to be bound by the terms of the
Confidentiality Agreement, provided that Parent, Newcastle and Steel are
responsible for any breach of the Confidentiality Agreement by any of their
Affiliates, (B) if they are required (by discovery, demand, legal proceeding or
other similar process) to disclose any Evaluation Material, Parent, Newcastle
and Steel would provide the Company with written notice of any such requirement
as soon as practicable and, prior to disclosing such material, request that
confidential treatment be accorded such information, (C) without the prior
written consent of the Company, Parent, Newcastle and Steel and their
representatives would not disclose their interest in the Transaction or any
terms, conditions or other facts with respect to any Transaction except as
required by law or the applicable rules of any national securities exchange or
automated quotation system or except to the extent already disclosed in a public
announcement that was not made in breach of the Confidentiality Agreement, (D)
they would not, for the two year period from the date of the Confidentiality
Agreement, recruit, solicit or hire for employment any officer or senior manager
of the Company or otherwise interfere with any such employee's employment
relationship with the Company (other than hires in response to general
solicitations in magazines and newspapers), (E) except as may be provided in a
definitive agreement relating to the Transaction, neither the Company nor any of
its representatives has made any representations regarding, or has any liability
arising from, the Evaluation Material, (F) the United States securities laws
prohibit Parent, Newcastle and Steel and their representatives that have
received material, non-public information about the Company from purchasing or
30
selling securities of the Company or from communicating such information to any
person under circumstances under which such other person may be expected to
purchase or sell securities of the Company, (G) upon request of the Company,
Parent, Newcastle and Steel would promptly return to the Company or destroy all
written Evaluation Material and all other records reflecting any Evaluation
Material, (H) until a definitive agreement with respect to a Transaction has
been executed, none of the Company, its stockholders or Parent, Newcastle and
Steel would have any legal obligation with respect to a Transaction except as
set forth in the Confidentiality Agreement and (I) they would not contact any
representative, stockholder, creditor, supplier or franchisee of the Company
without the prior consent of the Company.
14. DIVIDENDS AND DISTRIBUTIONS. If, on or after January 6, 2006,
the Company should split, combine or otherwise change the Shares or its
capitalization, acquire or otherwise cause a reduction in the number of
outstanding Shares or issue or sell any additional Shares (other than Shares
issued pursuant to and in accordance with the terms in effect on January 5,
2006, of employee stock options outstanding prior to such date), shares of any
other class or series of capital stock, other voting securities or any
securities convertible into, or options, rights, or warrants, conditional or
otherwise, to acquire, any of the foregoing, then, without prejudice to our
rights under "The Offer--Section 15", we may, in our reasonable discretion, make
such adjustments in the purchase price and other terms of the Offer as we deem
appropriate including the number or type of securities to be purchased.
If, on or after January 6, 2006, the Company should declare or pay any
dividend on the Shares or any distribution with respect to the Shares (including
the issuance of additional Shares or other securities or rights to purchase of
any securities) that is 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 purchased
pursuant to the Offer, then, without prejudice to our rights under "The
Offer--Section 15", (i) the purchase price per Share payable by us pursuant to
the Offer will be reduced to the extent of any such cash dividend or
distribution and (ii) the whole of any such non-cash dividend or distribution to
be received by the tendering stockholders will (a) be received and held by the
tendering stockholders for our account and will be required to be promptly
remitted and transferred by each tendering stockholder to the Depositary for our
account, accompanied by appropriate documentation of transfer or (b) be
exercised for our benefit at our direction, in which case the proceeds of such
exercise will promptly be remitted to us. Pending such remittance and subject to
applicable law, we will be entitled to all rights and privileges as owner of any
such non-cash dividend or distribution or proceeds thereof and may withhold the
entire purchase price or deduct from the purchase price the amount or value
thereof, as we determine in our reasonable discretion.
15. CONDITIONS OF THE OFFER.
The Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule
14e-1(c) promulgated under the Exchange Act, pay for, any Shares tendered
pursuant to the Offer (1) if the Minimum Condition is not satisfied as of the
expiration of the Offer, or (2) immediately prior to the expiration of the
Offer, any of the following conditions shall exist:
(i) there shall have been entered, enforced, instituted or issued by
any governmental authority, any legally binding judgment, order, temporary
restraining order, temporary or permanent injunction, ruling, proceeding,
action, suit, charge or decree: which (A) makes illegal, prevents,
restrains or prohibits the making of the Offer, the acceptance for payment
of, or payment for, any Shares by Parent, the Purchaser or any other
affiliate of Parent, or the consummation of the Merger or any of the other
transactions contemplated by the Merger Agreement; (B) prohibits or limits
the ownership or operation by the Company, Parent or any of their
subsidiaries of all or any material portion of the business or assets of
the Company, Parent or any of their subsidiaries; (C) imposes limitations
on the ability of Parent, the Purchaser or any other affiliate of Parent to
exercise full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Parent or the
Purchaser pursuant to the Offer or otherwise on all matters presented to
the Company's stockholders, including, without limitation, the approval and
adoption of the Merger Agreement and the Merger; (D) would reasonably be
expected to require divestiture by Parent, the Purchaser or any other
affiliate of the Purchaser of any Shares; or (E) which otherwise would
reasonably be expected to have a Company Material Adverse Effect or a
Purchaser Material Adverse Effect;
31
(ii) there shall have been any law, statute, rule, regulation,
legislation or interpretation of any nature enacted, enforced, promulgated
or issued by any governmental authority or deemed by any governmental
authority applicable to (A) Parent, the Company or any subsidiary or
affiliate of Parent or the Company or (B) any transaction contemplated by
the Merger Agreement, which is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (A) through
(E) of paragraph (i) above;
(iii) there shall have occurred any changes, conditions, events or
developments that would have, or be reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect;
(iv) there shall have occurred (A) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange or the Nasdaq, other than a shortening of trading hours or any
coordinated trading halt triggered solely as a result of a specified
increase or decrease in a market index, (B) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, or (C) any limitation (whether or not mandatory) on the extension
of credit by banks or other lending institutions in the United States or a
disruption of or material adverse change in either the syndication market
for credit facilities or the financial, banking or capital markets;
(v) it shall have been publicly disclosed, or Parent shall have
otherwise learned, that any person, other than Parent or the Purchaser,
shall have acquired or entered into a definitive agreement or agreement in
principle to acquire beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 50% or more of the then outstanding Shares, or shall have been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of 50% or more of any of the then outstanding Shares,
or the Board of Directors of the Company, the Special Committee of the
Board of Directors of the Company or any other committee thereof shall have
(A) withdrawn, modified or changed, in a manner adverse to Parent or the
Purchaser, the recommendation by such Board or approval by such committee
of the Offer, the Merger or the Merger Agreement, (B) approved or
recommended, or proposed publicly to approve or recommend, a Company
Takeover Proposal, (C) caused the Company to enter into any agreement
relating to any Company Takeover Proposal, or (D) resolved to do any of the
foregoing; or
(vi) (A) the representations and warranties of the Company set forth in
the Merger Agreement (other than the Fundamental Representations (as
defined below)), shall not be true and correct as of the date of the
expiration of the Offer (or, if the representation or warranty is expressly
made as of an earlier date, as of such earlier date), except where the
failure of such representations and warranties to be true and correct would
not be reasonably expected to have a Company Material Adverse Effect (as
defined below). For purposes of determining the truth and correctness of
any of such representations and warranties, any reference in such
representations and warranties to `materiality' or `Material Adverse
Effect' shall be disregarded; or
(B) the Fundamental Representations shall not be true and
correct in all material respects as of the date of the expiration of the
Offer (or, if the representation or warranty is expressly made as of an
earlier date, as of such earlier date).
For purposes of determining the truth and correctness of the
representations and warranties, no update of or modification to the Company
Disclosure Schedule to the Merger Agreement after the date of the Merger
Agreement shall be considered.
'Fundamental Representations' means the representations and warranties
of the Company set forth in Section 2.2(a) `Capitalization' and Section 2.4
`Authorization and Binding Effect' of the Merger Agreement, as described
below.
In Section 2.2(a) `Capitalization' of the Merger Agreement, the Company
represents and warrants: (i) the number and classes of authorized and
outstanding shares of Company stock, (ii) the number of Shares reserved for
issuance pursuant to outstanding options, (iii) that all outstanding shares
of Company stock and all shares of Company stock issuable pursuant to
outstanding options are or will be when issued, duly authorized, validly
issued, fully paid and non-assessable and (iv) that none of the outstanding
securities of the Company have been issued in violation of any federal or
state securities laws.
32
In Section 2.4 `Authorization and Binding Agreement' of the Merger
Agreement, the Company represents and warrants that (i) the Company has all
requisite corporate power and authority to execute and deliver the Merger
Agreement and to consummate the transactions contemplated thereby, (ii) the
execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated thereby (including the Offer and the Merger),
have been duly and validly authorized and approved by the Company's Board
of Directors and that such approval is sufficient to render inapplicable to
the Merger Agreement, the Merger and the other transactions contemplated by
the Merger Agreement the provisions of Section 203 of the Delaware General
Corporation Law, (iii) no other corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of the Merger
Agreement or to consummate the transactions contemplated thereby (other
than the requisite approval of the Merger by the stockholders of the
Company), (iv) the Merger Agreement has been duly and validly executed and
delivered by the Company and constitutes the legal, valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and
by principles of equity regarding the availability of remedies and (v) the
Special Committee of the Company has recommended to the Company's Board of
Directors that the Board approve, and the Board has approved, the Merger
Agreement, the Offer and the Merger.
(vii) the Company shall have failed to perform in any material respect
its obligations or to comply in any material respect with its agreements or
covenants to be performed or complied with by it under the Merger
Agreement;
(viii) the Merger Agreement shall have been terminated in accordance
with its terms;
(ix) there shall have been instituted or pending any stockholder
derivative litigation or stockholder class action litigation against the
Company, its subsidiaries or its executive officers or directors, which
would reasonably be expected to have a Company Material Adverse Effect;
(x) the applicable waiting period, if any, under the Hart-Scott-Rodino
Act shall not have expired or been terminated; or
(xi) the Amended Merger Agreement with LLCP shall not have been
terminated by the Company.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances (excluding any affirmative action or omission by Parent or the
Purchaser) giving rise to any such condition or may be waived by Parent or the
Purchaser in whole or in part at any time and from time to time (provided that
all conditions to the Offer must be satisfied or waived prior to expiration of
the Offer) in their reasonable discretion. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right; the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time,
except that any such right may not be asserted after the Expiration Date. If a
condition of the Offer is triggered, and the Purchaser nevertheless decides to
proceed with the Offer, such decision shall constitute a waiver of such
condition with respect to the events triggering such condition. The offer by an
affiliate of LLCP to acquire the Company, as such offer has been publicly
disclosed through the date hereof, has not triggered any of the conditions of
the Offer. Any determination made by us concerning the events described in this
Section 15 shall be final and binding upon all parties, subject to the tendering
stockholder's right to bring any dispute with respect thereto before a court of
competent jurisdiction.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
GENERAL. Based on our examination of publicly available information
filed by the Company with the SEC and other publicly available information
concerning the Company, other than any consents, approvals and authorizations
associated with either the HSR Condition or the Liquor Condition, we are not
aware of any governmental license or regulatory permit that appears to be
material to the Company's business that might be adversely affected by our
acquisition of Shares pursuant to the Offer or, except as set forth below, of
any approval or other action by any government or governmental administrative or
regulatory authority or agency, domestic or foreign, that would be required for
33
our acquisition or ownership of Shares pursuant to the Offer. Should any such
approval or other action be required or desirable, we currently contemplate
that, except as described below under "State Takeover Statutes", such approval
or other action will be sought. There is, however, no current intent to delay
the purchase of Shares tendered pursuant to the Offer pending the outcome of any
such matter. There can be no assurance that any such approval or other action,
if needed, would be obtained (with or without substantial conditions) or that if
such approvals were not obtained or such other actions were not taken adverse
consequences might not result to the Company's business or certain parts of the
Company's business might not have to be disposed of, any of which could cause us
to elect to terminate the Offer without the purchase of Shares thereunder. Our
obligation under the Offer to accept for payment and pay for Shares is subject
to the conditions set forth in "The Offer--Section 15".
ANTITRUST. Under the HSR Act and the rules and regulations that have
been issued by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated until certain information and documentary
material has been furnished for review by the Antitrust Division and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to these requirements. Purchaser will
file a Premerger Notification and Report Form with the Antitrust Division and
the FTC in connection with the purchase of Shares pursuant to the Offer.
Under the HSR Act, the purchase of Shares in the Offer may not be
completed until the expiration of a 15-calendar-day waiting period following the
filing by the Purchaser of the Premerger Notification and Report Form with the
FTC and Antitrust Division, unless the waiting period is earlier terminated by
the FTC and the Antitrust Division or we receive a Request for Additional
Information and Documentary Material from the Antitrust Division or the FTC
prior to that time. If either the FTC or the Antitrust Division were to issue a
Request for Additional Information and Documentary Material to us, the waiting
period with respect to the Offer would expire at 11:59 p.m., Eastern time, on
the tenth calendar day after the date of our substantial compliance with that
request. Thereafter, the waiting period could be extended only by court order or
with our consent. The additional 10-calendar-day waiting period may be
terminated sooner by the FTC and the Antitrust Division. Although the Company is
required to file certain information and documentary material with the Antitrust
Division and the FTC in connection with the Offer, neither the Company's failure
to make those filings nor the issuance to the Company by the FTC or the
Antitrust Division of a Request for Additional Information and Documentary
Material will extend the waiting period with respect to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality
under the antitrust laws of transactions, such as our acquisition of Shares in
the Offer and any merger between us and the Company. At any time before or after
our purchase of Shares, the Antitrust Division or the FTC could take such action
under the antitrust laws that either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares in the Offer, the
divestiture of Shares purchased pursuant to the Offer or the divestiture of
substantial assets of the Company or any of its subsidiaries. Private parties as
well as state attorneys general may also bring legal actions under the antitrust
laws under certain circumstances. See Section 15.
State antitrust authorities and private parties in certain
circumstances may bring legal action under the antitrust laws seeking to enjoin
the Offer or to impose conditions on the Offer.
STATE TAKEOVER STATUTES. A number of states have adopted laws which
purport, to varying degrees, to apply to attempts to acquire corporations that
are incorporated in, or which have substantial assets, stockholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws. Except as
described herein, we do not know whether any of these laws will, by their terms,
apply to the Offer or any merger or other business combination between us or any
of our affiliates and the Company, and we have not complied with any such laws.
To the extent that certain provisions of these laws purport to apply to the
Offer or any such merger or other business combination, we believe that there
are reasonable bases for contesting such laws.
If any government official or third party seeks to apply any state
takeover law to the Offer or any merger or other business combination between us
or any of our affiliates and the Company, we will take such action as then
appears desirable, which action may include challenging the applicability or
validity of such statute in appropriate court proceedings. If it is asserted
that one or more state takeover statutes is applicable to the Offer or any such
merger or other business combination and an appropriate court does not determine
that it is inapplicable or invalid as applied to the Offer or any such merger or
34
other business combination, we might be required to file certain information
with, or to receive approvals from, the relevant state authorities or holders of
Shares, and we may be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer or
any such merger or other business combination. In such case, we may not be
obligated to accept for payment or pay for any tendered Shares. See "The
Offer--Section 15".
OTHER. Any merger or other similar business combination that we propose
would also have to comply with any applicable U.S. federal law. In particular,
unless the Shares were deregistered under the Exchange Act prior to such
transaction, if such merger or other business combination were consummated more
than one year after termination of the Offer or did not provide for stockholders
to receive cash for their Shares in an amount at least equal to the price paid
in the Offer, we may be required to comply with Rule 13e-3 under the Exchange
Act. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the proposed transaction and the consideration offered to
minority stockholders in such a transaction be filed with the SEC and
distributed to such stockholders prior to consummation of the transaction.
LIQUOR APPROVALS. The Purchaser is required to obtain consents,
approvals or authorizations from the state, city and/or local liquor licensing
boards or agencies in certain states in which the Company holds liquor licenses
for the operation of its businesses. Certain of these approvals are required to
be obtained prior to a change in control being effected. It is not a condition
to the Purchaser's obligation to consummate the Offer that these approvals be
obtained prior to the Expiration Date. In addition, the surviving corporation
will be required to make filings or send notices to certain additional liquor
licensing agencies following consummation of the Offer and any merger.
17. FEES AND EXPENSES. We have retained MacKenzie Partners, Inc.
to act as the information agent and American Stock Transfer & Trust Company to
act as the depositary in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interviews and may request brokers, dealers, banks, trust companies and other
nominees to forward materials relating to the Offer to beneficial owners. The
Information Agent and the Depositary each will receive reasonable and customary
compensation for their respective services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities in connection therewith, including certain liabilities under the
U.S. federal securities laws.
We will not pay any fees or commissions to any broker or dealer or any
other person (other than the Information Agent and the Depositary) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, banks,
trust companies and other nominees will, upon request, be reimbursed by us for
reasonable and necessary costs and expenses incurred by them in forwarding
materials to their customers.
18. MISCELLANEOUS. The Offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any jurisdiction
in which the making of the Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, we may, in our
reasonable discretion, take such action as we may deem necessary to make the
Offer in any such jurisdiction and extend the Offer to holders of Shares in such
jurisdiction.
No person has been authorized to give any information or 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, such
information or representation must not be relied upon as having been authorized.
We have filed with the SEC a Tender Offer Statement on Schedule TO, as
amended, together with exhibits, pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer. The
Schedule TO and any amendments thereto, including exhibits, may be examined and
copies may be obtained from the offices of the SEC in the manner described in
"The Offer--Section 9" of this Offer to Purchase.
NPSP ACQUISITION CORP.
February 3, 2006
35
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE NEWCASTLE ENTITIES, THE STEEL ENTITIES,
PARENT AND PURCHASER
Mark E. Schwarz, Steven J. Pully and John P. Murray are the sole
officers of the Newcastle Entities which currently have no directors. Mr.
Schwarz is the President, Chief Executive Officer and sole director of Parent
and the Purchaser. Mr. Pully is the Secretary and Treasurer of Parent and the
Purchaser. Warren G. Lichtenstein is the sole executive officer and director of
the Steel Entities.
The Newcastle Entities, the Steel Entities, Parent, the Purchaser, Mark
E. Schwarz and Warren G. Lichtenstein are parties to a Joint Filing Agreement,
dated December 22, 2005, pursuant to which they have agreed to the joint filing
on behalf of each of them of a Statement on Schedule 13D dated December 22, 2005
(including amendments thereto) with respect to the Shares of the Company.
The name, current principal occupation or employment and material
occupations, positions, offices or employment for the past five years of each
director and executive officer of the Newcastle Entities, the Steel Entities,
Parent and the Purchaser are set forth below. The business address of each
director and officer of the Newcastle Entities is care of Newcastle Partners,
L.P., 300 Crescent Court, Suite 1110, Dallas, Texas 75201. The business address
of the sole director and officer of the Steel Entities is care of Steel Partners
II, L.P., 590 Madison Avenue, 32nd Floor, New York, New York 10022. Except as
provided in the Offer to Purchase, none of the directors and officers listed
below has, during the past five years, (i) been convicted in a criminal
proceeding or (ii) been a party to any judicial or administrative proceeding
that resulted in a judgment, decree or final order enjoining the person from
future violations of, or prohibiting activities subject to, U.S. federal or
state securities laws, or a finding of any violation of U.S. federal or state
securities laws. All directors and officers listed below are citizens of the
United States.
Current Principal Occupation or
Name Age Employment and Five-year Employment History
- ---- --- -------------------------------------------
Mark E. Schwarz 44 Mark E. Schwarz is the Chairman, Chief
Executive Officer and Portfolio Manager of
Newcastle Capital Management, L.P., a
private investment management firm he
founded in 1993 that is the general partner
of Parent. Mr. Schwarz is Chairman of the
Board and Chief Executive Officer of
Hallmark Financial Services, Inc., a
property and casualty insurance company,
Chairman of the Board of Bell Industries,
Inc., a computer systems integrator, Pizza
Inn, Inc., a franchisor and food and supply
distributor, and New Century Equity Holdings
Corp., an asset management company, and a
director of Nashua Corporation, a specialty
paper, label and printing supplies
manufacturer, SL Industries, Inc., a power
and data quality products manufacturer,
WebFinancial Corporation, a specialty bank
and finance company, and Vesta Insurance
Group, Inc., a holding company for a group
of insurance companies.
Warren G. Lichtenstein 39 Mr. Lichtenstein is the Chairman of the
Board, Secretary and the Managing Member of
Steel Partners, L.L.C., the general partner
of Steel Partners II, L.P., a private
investment partnership, and the President,
Chief Executive Officer and a director of
Steel Partners, Ltd., a management and
advisory company that provides management
services to Steel Partners II, L.P. and its
affiliates. Mr. Lichtenstein has been a
director (currently Chairman of the Board)
of United Industrial Corporation, a company
principally focused on the design,
production and support of defense systems
and a manufacturer of combustion equipment
for biomass and refuse fuels, since May
2001. Mr. Lichtenstein served as a director
of WebFinancial Corporation
("WebFinancial"), a consumer and commercial
lender, from 1996 to 2005 and served as
S-1
Chairman and Chief Executive Officer of
WebFinancial from December 1997 to June
2005. He also served as President of
WebFinancial from December 1997 through
December 2003. Mr. Lichtenstein has been a
director of Layne Christensen Company, a
provider of products and services for the
water, mineral, construction and energy
markets, since January 2004 and has been a
director of BKF Capital Group, Inc., a
publicly-traded investment firm, since June
2005.
Steven J. Pully 45 Mr. Pully is the President of Newcastle
Capital Management, L.P., the general
partner of Parent. Mr. Pully is also Chief
Executive Officer and a director of New
Century Equity Holdings Corp., an asset
management company, a director of Pizza Inn,
Inc., a franchisor and food and supply
distributor and was Chief Executive Officer
of Pinnacle Frames and Accents, Inc. from
January 2003 through June 2004, a private
company engaged in mass production of
picture frame products. Prior to joining
Newcastle Capital Management, L.P. in late
2001, from May 2000 to December 2001, he was
a managing director in the mergers and
acquisitions department of Banc of America
Securities, Inc. and from January 1997 to
May 2000 he was a member of the investment
banking department of Bear Stearns where he
became a senior managing director in 1999.
Prior to becoming an investment banker, Mr.
Pully practiced securities and corporate law
at the law firm of Baker & Botts. Mr. Pully
is a CPA, a CFA and a member of the Texas
Bar.
John P. Murray 35 Mr. Murray is the Chief Financial Officer of
Newcastle Capital Management, L.P., the
general partner of Parent. Prior to joining
Newcastle Capital Management, L.P. in
January 2002, Mr. Murray was a partner with
Speer & Murray, Ltd., an accounting firm
specializing in tax planning and compliance,
estate planning, asset protection and
investment management. Mr. Murray was also
previously employed by Ernst & Young, LLP as
a member of the audit staff.
S-2
SCHEDULE II
TRANSACTIONS IN THE SHARES BY THE NEWCASTLE ENTITIES, THE STEEL ENTITIES,
PARENT AND PURCHASER DURING THE PAST 60 DAYS
Shares of Common Stock Price Per Date of
Purchased Share ($) Purchase
--------- --------- --------
NEWCASTLE PARTNERS, L.P.
29,900 13.1003 11/07/05
37,500 13.0658 11/08/05
36,600 13.0530 11/09/05
48,000 12.9981 11/10/05
6,360 12.9939 11/11/05
25,525 13.0019 11/14/05
38,229 13.0014 11/15/05
61,800 12.9996 11/18/05
33,599 13.0122 11/21/05
45,800 13.0601 11/22/05
2,500 13.0460 11/22/05
12,700 13.0405 11/25/05
3,600 13.0500 12/06/05
250 13.1100 12/07/05
62,200 13.3081 12/12/05
NEWCASTLE CAPITAL MANAGEMENT, L.P.
None
NEWCASTLE CAPITAL GROUP, L.L.C.
None
STEEL PARTNERS II, L.P.
None
STEEL PARTNERS, L.L.C.
None
F&H ACQUISITION CORP.
None
S-3
NPSP ACQUISITION CORP.
None
S-4
Facsimile copies of the Letter of Transmittal will be accepted. The
Letter of Transmittal and certificates for Shares and any other required
documents should be sent to the Depositary at one of the addresses set forth
below:
The Depositary for the Offer is
American stock transfer & Trust Company
BY MAIL OR OVERNIGHT COURIER: BY HAND:
American Stock Transfer & Trust Company American Stock Transfer & Trust Company
Operations Center Attn: Reorganization Department
Attn: Reorganization Department 59 Maiden Lane
6201 15th Avenue Concourse Level
Brooklyn, NY 11219 New York, NY 10038
By Facsimile
(718) 234-5001
Confirm Facsimile Transmission
(By Telephone Only)
Toll Free (877) 248-6417
If you have questions or need additional copies of this Offer to
Purchase and the Letter of Transmittal, you can call the Information Agent at
its address and telephone numbers set forth below. You may also contact your
broker, dealer, bank, trust company or other nominee for assistance concerning
the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
105 Madison Avenue
New York, New York
(212) 929-5500 (call collect)
or
Call Toll-Free (800) 322-2885
Newcastle Partners L P
Filed: 3 Feb 06, 12:00am