By Facsimile: (312) 984-7700 and U.S. Mail
Heidi Steele, Esq. April 21, 2006
McDermott, Will & Emery LLP
227 West Monroe Street
Chicago, Illinois 60606
(312) 984-3624
Re: X-Rite, Incorporated
Form S-4 filed on March 23, 2006
File No. 333-132669
Dear Ms. Steele:
We have the following comments on your filing referenced
above. Please understand that the purpose of our review process is
to assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other aspect
of our review. Feel free to call us at the telephone number listed
at the end of this letter.
General
1. We note that you filed this Form S-4 and commenced your tender
offer in reliance on Rule 162 of the Securities Act of 1933, which
appears to have been unavailable to you because this offer was not
subject to Rule 13e-4(e) or 14d-4(b), but rather, Regulation 14E.
Accordingly, it appears that you should provide disclosure
relating to the consequences of filing a registration statement
covering shares issued in an offer that was not complete prior to
filing including disclosure in your risk factors, background of the
offer and financial statements, as appropriate. Please revise
accordingly or advise.
2. Further, please provide us with an analysis under FAS 5
regarding whether or not the loss contingency resulting from the
early commencement was probable, reasonably possible or remote and
whether the financial statements should be restated to reflect the
loss contingency.
3. We note your proposed press release sent to us on a
supplemental basis. Please amend your Form S-4 to include the extension
of the offer, the offering of withdrawal rights, the instruction to
Amazys holders not to tender, the information that an additional period
will be open to Amazys holders to tender after the registration
statement has been declared effective. Please make the appropriate
changes throughout your disclosure document, including, but not limited
to in the Questions and Answers about the Transaction.
4. In a supplemental response, tell us how many days after the
registration statement is declared effective you intend to keep
the offer open and provide us with your analysis as to how such period
may comply with Rule 14e-1(a), including its policy concerns.
5. Please update all your dates currently found in the disclosure
document, including the expected "settlement date."
6. Please state in the disclosure statement what exemption, if
any, you rely on from any U.S. Securities Laws.
Cover page
7. You state that "[s]hould X-Rite acquire less than 98% but 90%
or more of the voting rights of Amazys, X-Rite reserves the right to
merge Amazys with a company controlled by X-Rite whereby the
remaining Amazys minority shareholders would receive cash
consideration rather than an ownership interest in the surviving
entity. Please clarify the entirety of consideration to be paid
in such case, including how the cash amount will be determined and
by whom. Please state, if true, that in such circumstance, Amazys
holders will not receive consideration in the form now offered,
part X-Rite common stock and part cash. See our comment below at
page 12 regarding the Q&A "If I decide not to tender, how will your
offer affect my Amazys shares?"
8. You state that "[s]hould X-Rite acquire less than 90% of the
voting rights of Amazys, it reserves the right to purchase the
remaining minority Amazys shares by other means such as way of
private or public offer." Explain how you will proceed with this
measure and the consideration to be offered in such event. Tell
us whether or not the consideration will ever be more than that of
the offer. See our comment below at page 12 regarding the Q&A "If I
decide not to tender, how will your offer affect my Amazys
shares?"
9. We note that one of the conditions to the offer is that "at
least 70% of the total number of Amazys shares issued at the end of
the (possibly extended) offer period plus the maximum number of Amazys
shares that could be issued until the end of the additional
acceptance period upon exercise of the options under Amazys`
employee option plans." State the maximum number of Amazys shares,
both in number and percentage of outstanding securities that could be
issued until the end of the additional acceptance period upon exercise
of the options under Amazys` employee option plans. If the number is
not currently certain, you should provide a range of
possibilities, including the factors determining the final requirement.
In that respect, we believe that you should concisely describe the
entirety of the mechanics of acquiring the maximum number of shares under
the employee options and state the number and percentage throughout
your disclosure document when addressing the minimum condition to make
clear that it is above 70%, including, but not limited to the
Questions and Answers about the Transaction Section and Risk
Factors. We note the disclosure on page 9 that Based on 3,227,916
Amazys shares and options to purchase 205,150 Amazys shares outstanding
as of March 23, 2006, the above condition would be satisfied if
2,403,147 Amazys shares were validly tendered in the offer.
Please state this in percentage here as well.
10. Describe the beginning and end dates of the "additional
acceptance period," here, at the point of first use, to make clear
to holders the period of time. Explain that with the current
extension and in case of further extension of the offer period, the
start of the additional acceptance period will be postponed and when it
will start and end in each such event. See page 11. Further, state
whether or not the additional acceptance period may be subject to
extensions. Explain if this is a function of Swiss law or
requirements and whether or not it is the same "10 Swiss trading
day period beginning after the expiration of the (possibly extended)
offer period" referenced on page 11. State whether or not
withdrawal rights will extend through the additional acceptance period.
Please be consistent in reference and disclosure to this period
throughout your document, including, but not limited to page 17, and
consider defining the term for clarity.
Regulatory Statement, page 2
11. You state that you may seek from the Securities and Exchange
Commission exemptive relief from the requirements of Rule 14e-5
under the Securities and Exchange Act of 1934, as amended, that would
permit you or your agents to make purchases of, or arrangements to
purchase, Amazys shares outside the U.S. other than pursuant to
the offer. Please tell us, in a supplemental response, the status of
your request for exemptive relief from the SEC.
Questions and Answers about the Transaction, page 8
Have any competing offers to acquire Amazys` shares been made?
Page 10
12. Please update this section, including, but not necessarily
limited to the decision of Eichhof not to pursue a competing
offer. We note your Rule 425 filing on April 11, 2006.
How will I be notified if your offer is extended? Page 11
13. You state that if you extend the offer you will make a public
announcement of the extension no later than the fourth Swiss
trading day following the day on which the offer was previously
scheduled to expire. Tell us how this complies with Rule 14e-1(d),
which requires that a notice of extension by press release or other
public announcement be made which shall include disclosure of the
approximate number of securities deposited to date and shall be
issued no later than the earlier of 9:00 a.m. Eastern time, on the
next business day after the scheduled expiration date of the
offer. Any amendment should include corresponding changes throughout
the document, including, but not limited to your Extension,
Termination and Amendment section on page 55
Until what time can I withdraw previously tendered Amazys shares?
Page 11
14. Please describe the time period during which holders may
withdraw in the event of a competing bid.
If I decide not to tender, how will your offer affect my Amazys
shares? Page 12
15. We note your statement that if delisted, Amazys shares not
tendered pursuant to the offer may become illiquid and may be of
reduced value. Disclose the mechanics of what happens to shares
in the event of (i) delisting and cancellation of the remaining
shares in the event you receive 98% of the shares and (ii) receipt
of cash consideration in the event your acquire less than 98% but more
than 90%. See our comments above on this matter.
What happens to my Amazys options and restricted shares? Page 12
16. Disclose how you will, "if the offer is successful, promptly
after the settlement date," offer optionholders of options issued
under Amazys` employee stock option plans and outstanding as of
January 30, 2006, to purchase such options or any Amazys shares
acquired upon exercise of these options, in both cases on terms
equal to those of the offer. State how you will determine that "the
offer is successful." For example, it appears that if 70% of Amazys`
shares are tendered during the offer period, the offer would be
considered successful. State how many days after the settlement
date you will offer to purchase employee options or any shares
acquired upon exercise of these options. You should describe the
mechanics of how this will work in more detail. Tell us whether or
not the shares tendered in the offer are paid for by the settlement date,
and therefore, before you offer to purchase employee options or shares
acquired upon exercise of these options. Please explain your
disclosure on page 79 that you will make the offer "on terms that
are in accordance with the principle of equal treatment described
above." You should clarify where such principle is described above.
Further, please advise of the basis of your belief that this is not a
condition subsequent to the expiration of your offer.
If the offer is consummated, when will I receive the offer
consideration? Page 12
17. Disclose the number of days of each period you describe here.
For example, it appears that the offer expires, the additional
acceptance period begins the next day and is comprised of the ten
days following the expiration of the offer, and the settlement
date occurs within ten days after the end of the additional acceptance
period. We also note your disclosure at page 56. Tell us how
this complies with the requirement of prompt payment under Rule 14e-
1(c).
Conditions of Our Offer, page 16
18. Please explain what you mean by "until the end of the offer
period," as found in your conditions. For example, it appears
that the end of the offer period may mean settlement date, but it is
unclear.
19. Please clearly identify here, as on page 72, the conditions
that will survive the offer, providing dates and timeframes of all
referenced meetings or other events. Tell us why these
conditions subsequent are valid under U.S. Securities Laws and further
confirm to us that these conditions have been approved by the Swiss
Takeover Board.
20. We note that it is a condition to the offer that you acquire
"the maximum number" of Amazys shares that could be issued until the
end of the additional acceptance period upon exercise of the options
under the Amazys` employee option plans. State how you will
determine the maximum number. Further, it appears that this is a
condition subsequent in that the offer to purchase employees
options or shares issued upon exercise of these options will be made
"promptly after the settlement date." State whether or not this
is a condition subsequent within the meaning of article 13 para. 4 TOO.
See page 72.
Forward-Looking Statements, page 28
21. You state in this section that you undertake no obligation to
update, amend or clarify any forward-looking information contained
in this registration statement which includes your offer. As you
know, Regulation 14E imposes an obligation to amend the disclosure
document in an offer to reflect changes to the information previously
reported. Please revise your disclaimer to more clearly state
when you intend to update or amend the filing to reflect changes to
forward-looking information you have disclosed.
Closing Comment
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be certain that they have provided all information investors require
for an informed decision. Since the company is in possession of all
facts relating to its disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide, in writing, a statement from the purchasers acknowledging that:
* The company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of the Division of Corporation Finance in our review of your filing
or in response to our comments on your filing.
As appropriate, please amend your document in response to
these comments. You may wish to provide us with marked copies of the
amendment, if required, to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please file
your cover letter on EDGAR. Please understand that we may have
additional comments after reviewing your amendment and responses
to our comments. In addition, we believe a supplement needs to be
sent to security holders.
Please direct any questions to me at (202) 551-3257. You
may also contact me via facsimile at (202) 772-9203. Please send all
correspondence to us at the following ZIP code: 20549-0303.
Very truly yours,
Celeste M. Murphy,
Special Counsel
Office of Mergers and
Acquisitions