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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
(Rule 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION
14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
Autologic Information International, Inc.
(Name of Subject Company)
Autologic Information International, Inc.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
52803 10 3
(CUSIP Number of Class of Securities)
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William Shaw, Chief Executive Officer
and
Alvin J. Brunner, President
Autologic Information International, Inc.
1050 Rancho Conejo Boulevard
Thousand Oaks, California 91320
Telephone: (805) 498-9611
(Name, address and telephone number of person authorized to receive
notice and communication on behalf of the person(s) filing statement)
Copy to:
Richard A. Rubin, Esq.
Jenkens & Gilchrist Parker Chapin LLP
405 Lexington Avenue
New York, New York 10174
Telephone: (212) 704-6000
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Item 1. Subject Company Information
The name of the subject company is Autologic Information International,
Inc., a Delaware corporation ("Autologic"). The address of its principal
executive offices is 1050 Rancho Conejo Boulevard, Thousand Oaks, California
91320. The telephone number of Autologic at its principal executive offices is
(805) 498-9611.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement")
relates is Autologic's common stock, par value $.01 per share ("Autologic
Common Stock" or the "Shares"). As of September 25, 2001, there were 5,787,970
Shares issued and outstanding, or 6,026,770 Shares outstanding on a fully-
diluted basis (after giving effect to all outstanding options, warrants and
securities exercisable or convertible (whether or not vested) into or
exchangeable for Shares).
Item 2. Identity and Background of Filing Person
The filing person is the subject company. Autologic's name, business address
and business telephone number are set forth in Item 1 above.
This Statement relates to the cash tender offer by Autologic Acquisition
Corp., a Delaware corporation ("Merger Sub") and a wholly-owned subsidiary of
Agfa Corporation, a Delaware corporation ("Agfa"), which, in turn, is a wholly-
owned subsidiary of Agfa-Gevaert, N.V., a company organized under the laws of
Belgium ("Agfa-Gevaert") (Agfa-Gevaert, Agfa, and Merger Sub are sometimes
collectively referred to herein as the "Agfa Group"), to purchase each issued
and outstanding Share for $7.127 per Share, net to the seller in cash (the "Per
Share Offer Price"). The Offer is described in the Offer to Purchase, dated
October 3, 2001 (the "Offer to Purchase"), included in the Agfa Group's Tender
Offer Statement on Schedule TO filed with the Securities and Exchange
Commission on October 3, 2001 (as amended or supplemented from time to time,
the "Schedule TO"), and the related Letter of Transmittal (which together
collectively constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
September 25, 2001 (the "Merger Agreement"), among Autologic, Agfa and Merger
Sub. The Merger Agreement provides that, subject to the satisfaction or waiver
of certain conditions, following completion of the Offer, and in accordance
with the Delaware General Corporation Law (the "DGCL"), Merger Sub will be
merged with and into Autologic (the "Merger"), with Autologic surviving as a
wholly-owned subsidiary of Agfa (the "Surviving Corporation"). At the effective
time of the Merger (the "Effective Time"), each Share outstanding (other than
Shares owned by Autologic or owned, directly or indirectly, by Agfa or Merger
Sub and Shares which are owned by stockholders who have not voted in favor of
the Merger or consented thereto in writing and who have properly demanded
appraisal for such Shares in accordance with the DGCL) will be converted into
the right to receive the Per Share Offer Price. The summary and description of
the Merger Agreement and the conditions of the Offer contained in Section 13
and Section 15 of the Offer to Purchase, which Offer to Purchase is being
mailed to stockholders together with this Statement and filed as an exhibit to
the Schedule TO, are incorporated herein by reference. Such summary and
description are qualified in their entirety by reference to the Merger
Agreement which has been filed as Exhibit (e)(1) hereto and is incorporated
herein by reference.
As set forth in the Schedule TO, the principal executive offices and
telephone number of Merger Sub and Agfa is 100 Challenger Road, Ridgefield
Park, New Jersey 07660, telephone no. (201) 440-2500; and of Agfa-Gevaert is
Septestraat 27, B-2640 Mortsel, Belgium, telephone no. +32 3 444 2111.
Item 3. Past Contacts, Transactions, Negotiations, and Agreements
The information contained in the Information Statement pursuant to Section
14(f) of the Securities Exchange Act of 1934, as amended, and Rule 14f-1
thereunder, attached hereto as Annex C (the "Information
Statement") is incorporated herein by reference. Each material contract,
agreement, arrangement or understanding and any actual or potential conflict of
interest between Autologic or its affiliates and (i) its executive officers,
directors and affiliates or (ii) any member of the Agfa Group and its executive
officers, directors and affiliates, is either disclosed in the Information
Statement or set forth below or in Item 4. The Solicitation or Recommendation--
Reasons for the Recommendation of the Board of Directors and the Special
Committee. Each of the Board of Directors of Autologic (the "Board" or the
"Board of Directors") and a special committee of the Board of Directors
consisting of Leroy Bell, EuGene L. Falk and Paul H. McGarrell, who are not
employees, officers, directors (other than directors of Autologic), appointees,
nominees or affiliates of Autologic or Volt (the "Special Committee"), was
aware of these contracts, agreements, arrangements or understandings and any
actual or potential conflicts of interest and considered them along with the
other matters described below in "Item 4. The Solicitation or Recommendation--
Reasons for the Recommendation of the Board of Directors and the Special
Committee."
Merger Agreement
The summary and description of the Merger Agreement and the conditions of
the Offer contained in Section 13 and Section 15 of the Offer to Purchase,
which Offer to Purchase is being mailed to stockholders together with this
Statement and filed as an exhibit to the Schedule TO, are incorporated herein
by reference. Such summary and description are qualified in their entirety by
reference to the Merger Agreement which has been filed as Exhibit (e)(1) hereto
and is incorporated herein by reference.
Effects of the Offer and the Merger Under Autologic's Stock Plans
The summary and description of the treatment of stock options under the
Merger Agreement contained in Section 13 of the Offer to Purchase, which Offer
to Purchase is being mailed to stockholders together with this Statement and
filed as an exhibit to the Schedule TO, are incorporated herein by reference.
Such summary and description are qualified in their entirety by reference to
the Merger Agreement which has been filed as Exhibit (e)(1) hereto and is
incorporated herein by reference.
Volt Stockholder's Agreement
In connection with the Merger Agreement, Volt Information Sciences, Inc., a
Delaware corporation ("Volt"), the beneficial owner of 3,400,100 shares of
Autologic Common Stock, representing approximately 58.7% of the issued and
outstanding shares of Autologic Common Stock (or 56.4% on a fully diluted
basis), entered into a Stockholder's Agreement, dated as of September 25, 2001
(the "Volt Stockholder's Agreement"), with Agfa, Merger Sub and Autologic.
Pursuant to the Volt Stockholder's Agreement, Volt, among other things: (i)
agreed to tender in the Offer all Shares beneficially owned by Volt; (ii)
agreed to vote such Shares in favor of the Merger; (iii) granted to Agfa a
proxy with respect to voting such Shares; and (iv) granted Agfa an option to
purchase 33 1/3% of the Shares beneficially owned by Volt at the Per Share
Offer Price in the event the Merger Agreement is terminated (A) by Autologic,
if Autologic enters into an agreement providing for an acquisition of Autologic
based upon a Superior Proposal (as defined in the Merger Agreement) or (B) by
Agfa, if the Board of Autologic withdraws or modifies in a manner adverse to
Agfa its approval of the Merger Agreement or recommends such a Superior
Proposal. The summary and description of the Volt Stockholder's Agreement
contained in Section 13 of the Offer to Purchase, which Offer to Purchase is
being mailed to stockholders together with this Statement and filed as an
exhibit to the Schedule TO, are incorporated herein by reference. Such summary
and description are qualified in their entirety by reference to the Volt
Stockholder's Agreement which has been filed as Exhibit (e)(2) hereto and is
incorporated herein by reference.
Stockholders' Agreement
In connection with the Merger Agreement, all directors and executive
officers of Autologic have entered into a Stockholders' Agreement, dated as of
September 25, 2001 (the "Stockholders' Agreement"), with Agfa, Merger Sub and
Autologic. Such directors and executive officers own in the aggregate 600
shares of Autologic
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Common Stock and also own options exercisable for 75,000 additional Shares.
Pursuant to the Stockholders' Agreement, each such director and executive
officer, among other things: (i) agreed to tender in the Offer all Shares
beneficially owned by him; (ii) agreed to vote such Shares in favor of the
Merger; and (iii) granted to Agfa a proxy with respect to voting such Shares.
The summary and description of the Stockholders' Agreement contained in Section
13 of the Offer to Purchase, which Offer to Purchase is being mailed to
stockholders together with this Statement and filed as an exhibit to the
Schedule TO, are incorporated herein by reference. Such summary and description
are qualified in their entirety by reference to the Stockholders' Agreement
which has been filed as Exhibit (e)(3) hereto and is incorporated herein by
reference.
Transaction Option Agreement
In connection with the Merger Agreement, Agfa and Autologic have entered
into a Transaction Option Agreement, dated as of September 25, 2001 (the
"Transaction Option Agreement"), pursuant to which Autologic has, among other
things, granted to Agfa an option to purchase from Autologic at the Per Share
Offer Price up to a number of shares of Autologic Common Stock equal to 19.9%
of the number of shares of Autologic Common Stock issued and outstanding
immediately prior to the exercise of such option. Such option is exercisable at
any time after the completion of the Offer only if after giving effect to such
option, the number of shares of Common Stock beneficially owned by Agfa would
equal at least 90% of the outstanding shares of Autologic Common Stock. The
summary and description of the Transaction Option Agreement contained in
Section 13 of the Offer to Purchase, which Offer to Purchase is being mailed to
stockholders together with this Statement and filed as an exhibit to the
Schedule TO, are incorporated herein by reference. Such summary and description
are qualified in their entirety by reference to the Transaction Option
Agreement which has been filed as Exhibit (e)(4) hereto and is incorporated
herein by reference.
Lease Agreement
In connection with the Merger Agreement, Autologic and Volt Realty Two,
Inc., a Nevada corporation and wholly-owned subsidiary of Volt ("Volt Realty"),
have entered into a lease, dated as of September 25, 2001 (the "Lease"),
pursuant to which Volt has agreed, subject to certain terms and conditions, to
lease to Autologic (and the Surviving Corporation) until December 31, 2002, the
principal executive offices of Autologic in Thousand Oaks, California (the
"Premises") on substantially the same economic terms as those contained in the
existing lease for the Premises between Volt and Autologic. The Lease provides
for two three month renewal options in favor of Autologic. The summary and
description of the Lease contained in Section 13 of the Offer to Purchase,
which Offer to Purchase is being mailed to stockholders together with this
Statement and filed as an exhibit to the Schedule TO, are incorporated herein
by reference. Such summary and description are qualified in their entirety by
reference to the Lease which has been filed as Exhibit (e)(5) hereto and is
incorporated herein by reference.
Indemnification; Directors' and Officers' Insurance
The Merger Agreement provides that, as of the Effective Time, the provisions
regarding indemnification of officers and directors contained in the
Certificate of Incorporation of the Surviving Corporation is to conform to
similar provisions presently contained in Autologic's Certificate of
Incorporation.
The Merger Agreement also provides that for six years after the Effective
Time, the Surviving Corporation will indemnify and hold harmless (including the
advancement of expenses) the current and former directors and officers of
Autologic in respect of acts or omissions occurring on or prior to the
Effective Time to the extent provided in Autologic's Certificate of
Incorporation and by-laws in effect on September 25, 2001; provided that any
such indemnification will be subject to any limitation imposed from time to
time under applicable law. Autologic will purchase, effective on the Offer
Closing Date (as defined in the Merger Agreement), a "run-off" insurance policy
of Autologic's current directors' and officers' insurance and indemnification
policy with maximum aggregate limit of liability that can be obtained for a
premium of $150,000 covering claims that may be made during a period of six (6)
years after the Offer Closing Date against those who are directors and officers
of Autologic prior to the Effective Time for events occurring on or prior to
the Effective Time, with
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retention and co-insurance amounts no greater than the minimum amounts required
by Delaware state law. Such policies may be subject to customary conditions and
exclusions.
Item 4. The Solicitation or Recommendation
Recommendation of Autologic's Board of Directors and the Special Committee
At a meeting held on September 24, 2001, the Special Committee unanimously
(i) determined that the Offer and the Merger are fair to, and in the best
interests of, the stockholders of Autologic (other than Volt) and (ii)
recommended that Autologic's Board of Directors approve the execution and
delivery and performance of the Merger Agreement, the Stockholders' Agreement,
the Volt Stockholder's Agreement, the Transaction Option Agreement and the
Lease.
At a special meeting of the Board of Directors of Autologic held on
September 24, 2001, the Board unanimously: (i) determined that the Merger is
fair to, and in the best interests of, the stockholders of Autologic; (ii)
approved the tender offer contemplated in the Merger Agreement and recommended
to the stockholders of Autologic that they accept the tender offer and tender
their shares of Autologic Common Stock pursuant thereto; (iii) recommended that
the stockholders of Autologic vote in favor of adoption of the Merger Agreement
at any meeting of stockholders of Autologic that may be called to consider
adopting the Merger Agreement; and (iv) approved and declared advisable each of
the Merger Agreement, the Volt Stockholder's Agreement, the Stockholders'
Agreement, the Transaction Option Agreement and the Lease.
Accordingly, the Board unanimously recommends that the stockholders of
Autologic tender their Shares pursuant to the Offer. A copy of a letter to the
stockholders of Autologic communicating the Board's and the Special Committee's
recommendations is filed as Exhibit (a)(1) hereto and is incorporated herein by
reference.
Background for the Recommendation of the Board of Directors and the Special
Committee
On January 29, 1996, Volt caused its wholly-owned subsidiary, Autologic,
Incorporated ("AI"), to be merged with and into Autologic and simultaneously,
Information International, Inc. ("Triple-I"), a publicly held company, was,
pursuant to a vote of its stockholders, also merged with and into Autologic, as
a result of which the former owners of Triple-I became the owners of 41% (with
Volt owning the remaining 59%) of the then outstanding Common Stock of
Autologic. Volt's present ownership is approximately 58.7% of the issued and
outstanding shares of Autologic Common Stock (or approximately 56.4% on a fully
diluted basis).
Since at least 1994, Autologic (including its predecessor AI) has sold
certain film imagers and associated chemical processing units manufactured by
Agfa/Agfa-Gevaert. In addition, many products manufactured by Autologic use
Agfa/Agfa-Gevaert film products, plates and chemistry and some of Autologic's
worldwide distributors sell Agfa/Agfa-Gevaert film and plate products.
Autologic also helps Agfa/Agfa-Gevaert to promote those products. Over the last
two years, Autologic has purchased an aggregate of approximately $717,000 of
products from Agfa, Agfa-Gevaert and/or their affiliates in the ordinary course
of business. In addition, Autologic and Agfa/Agfa-Gevaert installation and
service personnel work together to complete installations and assist each other
when service issues arise involving film, plate or imager problems.
On May 10, 2000, Etienne J. Van Damme, Senior Vice President of Business
Development of Agfa's Graphic Systems Group, telephoned William Shaw, Chairman
of the Board and Chief Executive Officer of Autologic and Chairman of the Board
and President of Volt, to express Agfa's possible interest in acquiring
Autologic. This conversation resulted in the parties' decision to talk further.
During May 18-21, 2000 at the DRUPA trade show in Duesseldorf, Germany,
Leroy Bell, a director of Autologic, and Dennis Doolittle, President of
Autologic at the time, met with Friedrich Hujer, a member of the Board of
Management of Agfa-Gevaert, and Walter Van Leuven, General Manager Systems
Business Group of Agfa-Gevaert. Discussions were held directed toward
negotiating an arrangement under which Autologic would become a distributor of
Agfa/Agfa-Gevaert's photographic plate products.
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On May 25, 2000, Mr. Van Damme again called Mr. Shaw to express Agfa's
continuing interest in acquiring Autologic.
On June 13, 2000, at the request of Agfa, Mr. Van Damme met with Mr. Shaw
and James Groberg, a director of Autologic and Senior Vice President, Chief
Financial Officer and a director of Volt, at Volt's offices in New York to
discuss potential business relationships between Agfa and Autologic.
On September 11, 2000, Mr. Van Damme and H. Jack Knadjian, Agfa's Director
of Newspaper Systems, met with Messrs. Shaw and Groberg in New York at the
offices of Jenkens & Gilchrist Parker Chapin LLP, outside legal counsel to
Autologic ("Jenkens & Gilchrist"), to continue the discussions of potential
business opportunities and to investigate business alternatives, including
joint selling and other potential strategic transactions. During the course of
the meeting, Messrs. Van Damme and Knadjian inquired as to whether Autologic
would be interested in a sale of Autologic. Mr. Shaw indicated that he did not
believe there would be such interest, but that Autologic would be willing to
listen to a proposal. The representatives of Agfa then discussed why they
believed a business combination of Agfa and Autologic could prove beneficial to
both companies and indicated that Agfa would propose an acquisition price.
On December 21, 2000, a meeting was held at the offices of Volt which was
attended by Messrs. Shaw, Groberg and Van Damme. At this meeting, Agfa and
Autologic discussed a potential transaction and executed a mutual
confidentiality agreement (which was subsequently modified for clarification),
pursuant to which the parties agreed to refrain from disclosing confidential
information shared between them in connection with their ongoing business
discussions.
On December 22, 2000, Agfa sent its first due diligence request letter to
Autologic in connection with its potential acquisition of Autologic.
Thereafter, the parties continued with the due diligence process and, through
April 2001, had various telephone conversations regarding a potential
acquisition of Autologic and other business relationships between Agfa and
Autologic.
In March 2001, Messrs. Van Damme and Shaw exchanged correspondence and held
various telephone conversations regarding the terms of a proposed transaction,
including price.
On April 30, 2001, a meeting was held at the offices of Volt in New York. In
attendance were Messrs. Shaw and Groberg, Alvin J. Brunner, President and Chief
Operating Officer of Autologic, Jerome Shaw, a director of Autologic and Vice
President, Secretary and a director of Volt, Jack Egan, Vice President
Corporate Accounting of Volt, Messrs. Van Damme and Knadjian, Hank Rej,
Business Analyst of Agfa, and Frederick Joseph, a Managing Director of Morgan
Lewis Githens & Ahn, Inc., Autologic's investment bankers ("MLGA"). The purpose
of the meeting was for Autologic and Volt to discuss with Agfa open due
diligence matters and the potential for an acquisition.
On May 9, 2001, a meeting was held at the offices of Volt in New York which
was attended by Messrs. Shaw, Groberg, Brunner, Joseph, Van Damme and Marc
Elsermans, General Manager, Graphic Systems Group of Agfa. The meeting focused
on the profitability of Autologic and the position of Autologic in the
newspaper marketplace.
On May 10 and 11, 2001, a meeting was held at the offices of Autologic in
Thousand Oaks, California which was attended by Messrs. Brunner and Groberg,
Anthony F. Marrelli, Vice President and Chief Financial Officer of Autologic,
and Messrs. Van Damme and Knadjian. The purpose of this meeting was to further
familiarize Agfa with the facilities, products, operations and financial
performance of Autologic.
Beginning in May and accelerating in July and August 2001, MLGA, on behalf
of Autologic, contacted certain other parties that had either previously
expressed an interest in acquiring Autologic or who MLGA, with input from
Autologic and Volt, believed might have strategic reasons for acquiring
Autologic.
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On July 12, 2001, Messrs. Knadjian and Van Damme met with Messrs. Shaw,
Groberg, Brunner and Joseph at Volt's offices in New York to update Autologic
on Agfa's proposed timing and process for completion of the proposed
acquisition of Autologic.
On July 25, 2001, a meeting was held at the offices of Volt in New York,
which was attended by Messrs. Shaw, Groberg and Van Damme, Frederick Dehing,
Mergers and Acquisitions Manager of Agfa, Eddy Rottie, Chief Financial Officer
of Agfa, Robert Sarafian, In-House Counsel of Agfa, Mr. Joseph, attorneys from
Jenkens & Gilchrist, counsel for Autologic, and Testa, Hurwitz & Thibeault,
LLP, counsel for Agfa ("Testa Hurwitz"), Howard B. Weinreich, Senior Vice
President and General Counsel of Volt and Lisa Valentino, Senior Staff Counsel
of Volt. At that meeting the structure and terms of the proposed transaction
were discussed and negotiated.
Beginning on July 26, 2001 and continuing over the next eight weeks, Agfa's
due diligence investigation of Autologic intensified. Representatives of the
parties exchanged information and held a number of conversations, both in
person and by teleconference, regarding due diligence matters. During this
period, a representative of Agfa visited Autologic's main facility in Thousand
Oaks, California, as well as the Ann Arbor, Michigan facility of Xitron,
Incorporated ("Xitron"), one of Autologic's wholly-owned subsidiaries, to meet
with the management of Autologic and Xitron and conduct additional due
diligence.
On July 31, 2001, a telephonic meeting of Autologic's Board was held at
which representatives of MLGA and attorneys from Jenkens & Gilchrist were
present. At that meeting, the details of the proposed transaction were
presented to the Board by the attorneys from Jenkens & Gilchrist. The
representatives of MLGA discussed the results of earlier discussions with those
that had expressed a preliminary interest in acquiring Autologic and with other
possible purchasers of Autologic. The Board resolved to authorize the officers
of Autologic to proceed with negotiations with Agfa and also to continue to
determine the interest of other potential buyers.
On August 3, 2001, Messrs. Rottie and Knadjian met with representatives from
Autologic, including Messrs. Shaw and Groberg, and Mr. Joseph from MLGA, at
Volt's offices in New York to discuss and negotiate the terms and conditions of
a letter of intent to be executed in connection with the proposed acquisition.
During the next several days, representatives of Autologic and Agfa and
their respective attorneys negotiated the terms of a letter of intent setting
forth the basic structure and terms of the proposed transaction.
On August 10, 2001, a telephonic meeting of Autologic's Board was held at
which representatives of MLGA and Jenkens & Gilchrist were present. At that
meeting, attorneys of Jenkens & Gilchrist described to the Board the status of
the Agfa transaction and specific terms of the proposed transaction were
discussed at length. MLGA summarized its discussions with other potential
buyers and stated that, based on such discussions, no competitive offer had
been made and that the proposal from Agfa was the most favorable to the
stockholders of Autologic. The Board then authorized the officers of Autologic
to enter into a letter of intent with Agfa. Counsel to Autologic then
recommended that the Board form the Special Committee which would serve to
review, evaluate and consider whether the transaction with Agfa was fair from a
financial point of view to the stockholders of Autologic other than Volt, and
make a recommendation to the Board with respect to such proposed transaction.
The Board then formed the Special Committee and appointed Leroy Bell, EuGene
Falk and Paul McGarrell to serve thereon, with Mr. McGarrell to serve as the
Special Committee's Chairman. The Board also authorized the Special Committee
to retain, at the expense of Autologic, legal counsel and an investment banking
firm to assist and advise the Special Committee.
On or about August 14, 2001, the Special Committee retained the law firm of
Mahoney Hawkes LLP ("Mahoney Hawkes") to represent it. Mahoney Hawkes was
already familiar with Autologic as it had represented Triple I in connection
with its merger with Autologic in 1996. The Special Committee also determined
to select The Seidler Companies Incorporated ("Seidler"), which also was
familiar with Autologic because it had represented Triple I in connection with
the 1996 merger with Autologic, to advise it with respect
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to the proposed acquisition of Autologic by Agfa and to render a written
opinion as to whether such transaction would be fair to Autologic's
stockholders (other than Volt) from a financial point of view.
On August 20, 2001, Volt entered into a mutual confidentiality agreement
with Agfa, pursuant to which those parties agreed to refrain from disclosing
confidential information shared between them.
On August 21, 2001, Agfa, Autologic and Volt executed a non-binding letter
of intent containing the parties' basic understanding of the principal terms
and conditions of the Offer and the Merger, which letter of intent was
scheduled to expire on September 6, 2001. The letter of intent was amended on
September 6, 2001 to, among other things, amend the formula for determining the
purchase price to be paid by Agfa and extend the term of the letter of intent.
On August 27, 2001, Testa Hurwitz circulated initial drafts of the Merger
Agreement, the Volt Stockholder's Agreement, the Stockholders' Agreement and
the Transaction Option Agreement. Thereafter, representatives of Agfa and
Autologic and their respective attorneys began negotiating the terms and
conditions of the definitive agreements.
On August 29, 2001, Autologic and MLGA entered into an engagement letter to
confirm the terms of MLGA's engagement to advise Autologic with respect to any
proposed acquisition of it and to render a written opinion as to whether the
transaction was fair to Autologic's stockholders from a financial point of
view.
On August 31, 2001, Autologic, at the request of the Special Committee,
executed an engagement letter with Seidler to confirm the terms of Seidler's
engagement to advise the Special Committee with respect to the proposed
acquisition of Autologic by Agfa and to render a written opinion as to whether
such transaction was fair to Autologic's stockholders (other than Volt) from a
financial point of view.
On September 5, 2001, a meeting of the Special Committee of Autologic was
held which was also attended by representatives of Mahoney Hawkes LLP and
Seidler. At that meeting, the nature of Seidler's proposed engagement was
discussed. Seidler was informed of the nature and status of the transaction and
was presented with the then current drafts of the Merger Agreement and related
documents.
At a meeting of the board of directors of Agfa-Gevaert held on September 6,
2001, Ludo Verhoeven, Chief Executive Officer of Agfa-Gevaert, made a
presentation to the strategy committee of Agfa-Gevaert's board of directors
regarding the proposed acquisition of Autologic.
On September 19, 2001, a meeting of the Special Committee was held at which
Seidler made an initial presentation of its report analyzing the transaction
and the proposed Per Share Offer Price. The Special Committee discussed with
Seidler Autologic's business, the nature and results of MLGA's discussions with
certain other parties that had either previously expressed an interest in
acquiring Autologic or who may have strategic reasons for acquiring Autologic,
and discussed whether there may be other competitive bidders in addition to
those contacted by MLGA.
At a regularly scheduled meeting of the board of directors of Agfa-Gevaert
held on September 24, 2001, Agfa-Gevaert's board of directors unanimously
approved and authorized the Merger Agreement and the other agreements to which
Agfa is a party and the transactions contemplated thereby, including the Offer
and the Merger.
On September 24, 2001, the boards of directors of Agfa and Merger Sub each
executed a unanimous written consent approving and authorizing the Merger
Agreement, the other agreements to which it is a party and the transactions
contemplated thereby, including the Offer and the Merger.
At a special meeting of the board of directors of Volt held on September 24,
2001, the board of directors of Volt unanimously determined that it was in
Volt's best interest to enter into the Volt Stockholder's
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Agreement and authorized the execution and delivery thereof, subject to the
approval of the Merger Agreement by Autologic's Board of Directors, whose
meeting was being held later that day.
At a meeting of the Special Committee held on September 24, 2001, the
Special Committee considered the terms of the transaction, the reasons
therefor, an updated report of Seidler, and an oral opinion of Seidler
(subsequently confirmed in writing) that the proposed transaction was fair to
the stockholders of Autologic (other than Volt) from a financial point of view.
The Special Committee then unanimously (i) determined that the Offer and the
Merger are fair to, and in the best interests of, the stockholders of Autologic
(other than Volt) and (ii) recommended that Autologic's Board of Directors
approve the execution and delivery and performance of the Merger Agreement, the
Stockholders' Agreement, the Volt Stockholder's Agreement, the Transaction
Option Agreement and the Lease.
At a special meeting of the Board of Directors of Autologic held on
September 24, 2001, the Board considered the terms of the transaction, the
reasons therefor, the recommendation of the Special Committee, and an oral
opinion of MLGA (subsequently confirmed in writing) that the proposed
transaction was fair to the stockholders of Autologic from a financial point of
view. The Board then unanimously: (i) determined that the Merger is fair to,
and in the best interests of, the stockholders of Autologic; (ii) approved the
tender offer contemplated in the Merger Agreement and recommended to the
stockholders of Autologic that they accept the tender offer and tender their
shares of Autologic Common Stock pursuant thereto; (iii) recommended that the
stockholders of Autologic vote in favor of adoption of the Merger Agreement at
any meeting of stockholders of Autologic that may be called to consider
adopting the Merger Agreement; and (iv) approved and declared advisable each of
the Merger Agreement, the Volt Stockholder's Agreement, the Stockholders'
Agreement, the Transaction Option Agreement and the Lease.
During the evening of September 24, 2001 and day of September 25, 2001,
representatives of Agfa and Autologic verified information used in the formula
to determine the Per Share Offer Price contained in the letter of intent among
the parties.
In the evening of September 25, 2001, the Merger Agreement, the Volt
Stockholder's Agreement, the Stockholders' Agreement, the Transaction Option
Agreement, and the Lease were each executed and delivered.
Prior to the opening of the financial markets on September 26, 2001, Agfa
and Autologic issued a joint press release, and Volt issued a press release,
announcing the execution of the Merger Agreement. Agfa-Gevaert, Agfa and Merger
Sub filed a Schedule TO-C and each of Autologic and Volt filed a Schedule 14D9-
C with the Securities and Exchange Commission, each incorporating its
respective press release. In addition, on September 26, 2001, Autologic filed a
Current Report on Form 8-K with the Securities and Exchange Commission filing
the Merger Agreement, the Volt Stockholder's Agreement, the Stockholders'
Agreement, the Transaction Option Agreement and the Lease, and Volt filed a
Current Report on Form 8-K with the Securities and Exchange Commission filing
the Merger Agreement and the Volt Stockholder's Agreement.
Reasons for the Recommendation of the Board of Directors and the Special
Committee
In making the determinations and recommendations set forth above, each of
the Board and the Special Committee considered a number of factors, including,
without limitation, the following:
. The amount of consideration to be received by Autologic's stockholders in
the Offer and that the Per Share Offer Price represents a substantial
premium over the closing price of the Autologic Common Stock of $2.45 on
September 21, 2001 (the last trading day prior to the meetings of the
Special Committee and the Board).
. The fact that the structure of the acquisition of Autologic by the Agfa
Group as provided for in the Merger Agreement involves an all cash tender
offer for all outstanding Shares to be commenced within five business
days of the public announcement of the Merger Agreement and to be
followed as promptly as practicable by a merger for the same
consideration, thereby enabling Autologic's stockholders to obtain cash
for their Shares at the earliest possible time.
8
. The Board's belief, based upon presentations by Autologic's management
and financial advisors, that the Per Share Offer Price was fair in light
of the financial condition, results of operations, business and prospects
of Autologic.
. In the case of the Board's determination and recommendation, the opinion
of MLGA to the Board, dated September 24, 2001, that, as of the date of
the opinion and based on and subject to certain assumptions and
qualifications stated in the opinion, the consideration to be received by
the stockholders of Autologic in the Offer and the Merger is fair to such
stockholders from a financial point of view. A copy of the MLGA opinion
is attached hereto as Annex A and stockholders are urged to read such
opinion in its entirety.
. The opinion of Seidler to the Special Committee, dated September 24,
2001, that, as of the date of the opinion and based on and subject to
certain assumptions and qualifications stated in the opinion, the
consideration to be received by the stockholders other than Volt in the
Offer and the Merger is fair to such stockholders from a financial point
of view. A copy of the Seidler opinion is attached hereto as Annex B and
stockholders are urged to read such opinion in its entirety.
. The provision of the Merger Agreement permitting Autologic, subject to
certain conditions, to negotiate with third parties that make unsolicited
bona fide written Superior Proposals (as defined in the Merger Agreement)
if the Board determines in good faith, based on the written opinion of
its outside counsel, that the failure to take such action could result in
a breach of the Board's fiduciary obligations to Autologic's stockholders
under applicable law. The Board also considered the terms of the Merger
Agreement permitting Autologic to terminate the Merger Agreement and
accept a Superior Proposal under certain conditions, including that
Autologic pay Agfa a $1,486,030 termination fee and reimburse Agfa for
out-of-pocket expenses up to an aggregate of $350,000, and that upon such
termination, Agfa may exercise its option under the Volt Stockholder's
Agreement to purchase 33 1/3% of the Shares beneficially owned by Volt at
the Per Share Offer Price. The Board considered the possible effect of
these provisions of the Merger Agreement and the Volt Stockholder's
Agreement on third parties who might be interested in exploring an
acquisition of Autologic. In this regard, the Board recognized that the
provisions of the Merger Agreement and the Volt Stockholder's Agreement
relating to the termination fee, the reimbursement of Agfa's expenses,
the option offered by Volt to Agfa and the non-solicitation of takeover
proposals were insisted upon by Agfa as a condition to entering into the
Merger Agreement.
. The contacts that Autologic and MLGA had with third parties regarding a
potential transaction involving Autologic, and discussions with
management and MLGA regarding the likelihood that a third party would be
prepared to pay a higher price for the Shares than the Per Share Offer
Price in a transaction that could be completed on a timely basis.
. The likelihood that the Offer and the Merger will be consummated in light
of the fact that the Offer and the Merger are not subject to any
financing or diligence condition and that the other conditions to the
Offer and the Merger are customary in nature.
. The possibility of continuing to operate Autologic as an independent
entity and the risks and benefits inherent therein.
. Information with regard to the financial condition, results of
operations, business and prospects of Autologic, as well as current
economic and market conditions (including current conditions in the
industry in which Autologic competes).
. The terms of the Merger Agreement, including the parties'
representations, warranties and covenants and the conditions to their
respective obligations.
. The potential conflicts of interest, all as described above in Item 3.
The foregoing discussion of the information and factors considered by the
Board and the Special Committee is not intended to be exhaustive, but includes
the material factors considered by the Board and the Special Committee. In view
of the variety of factors considered in connection with their evaluation of the
Offer
9
and the Merger, the Board and the Special Committee did not find it practicable
to, and did not, quantify or otherwise assign relative weights to the above
factors or determine that any factor was of particular importance. Rather, each
of the Board and the Special Committee viewed its position and recommendations
as being based on the totality of the information presented to and considered
by it. In addition, it is possible that different members of the Board and the
Special Committee assigned different weights to the various factors described
above.
Intent to Tender
Pursuant to the Volt Stockholder's Agreement and the Stockholders'
Agreement, Volt and all directors and executive officers of Autologic have
agreed to tender all of the Shares beneficially owned by them to Agfa in the
Offer, and to vote their Shares in favor of the Merger and against approval of
any proposal made in opposition to, or in competition with, the Merger and the
Merger Agreement. Volt and such directors and executive officers own an
aggregate of 3,400,700 shares of Autologic Common Stock and options to purchase
75,000 Shares, representing approximately 57.6% of the issued outstanding
shares of Autologic Common Stock on a fully diluted basis.
Item 5. Persons/Assets, Retained, Employed, Compensated or Used
Autologic retained MLGA as its financial advisor for the transaction and to
determine whether the terms of the Offer and the Merger are fair to Autologic's
stockholders from a financial point of view. Pursuant to the terms of MLGA's
engagement, to date, Autologic has paid MLGA for its services and fairness
opinion an aggregate financial advisory fee equal to $300,000. Autologic will
be required to pay MLGA an additional $25,000 if the total amount of
Autologic's expenses incurred in connection with the Offer and the Merger does
not exceed $750,000. In addition, Autologic has agreed to reimburse MLGA for
its reasonable out-of-pocket expenses in connection with its services to
Autologic. All fees and expenses payable to MLGA by Autologic are not
contingent on the consummation of the Offer or the Merger. Autologic also has
agreed to indemnify MLGA and certain related parties against certain
liabilities, including liabilities under the Federal securities laws, arising
out of MLGA's engagement.
At the request of the Special Committee, Autologic also retained Seidler for
the purpose of advising the Special Committee as to whether the terms of the
Offer and the Merger are fair to Autologic's stockholders (other than Volt)
from a financial point of view. Pursuant to the terms of Seidler's engagement,
Autologic will pay Seidler for its services and fairness opinion an aggregate
financial advisory fee equal to $75,000 (of which $50,000 has been paid to
date). In addition, Autologic has agreed to reimburse Seidler for its
reasonable out-of-pocket expenses in connection with its services to Autologic.
All fees and expenses payable to Seidler by Autologic are not contingent on the
consummation of the Merger. Autologic also has agreed to indemnify Seidler and
certain related parties against certain liabilities, including liabilities
under the Federal securities laws, arising out of Seidler's engagement.
Except as set forth above, neither Autologic nor anyone acting on its behalf
has employed, retained or compensated, or currently intends to employ, retain
or compensate, any person to make solicitations or recommendations to the
stockholders of Autologic on its behalf with respect to the Offer or the
Merger.
Item 6. Interest in Securities of the Subject Company
No transactions in the Shares have been effected during the past 60 days by
Autologic or, to the best of Autologic's knowledge, by any executive officer,
director or affiliate of Autologic.
Pursuant to the Volt Stockholder's Agreement, Volt has granted Agfa an
option to purchase 33 1/3% of the shares of Autologic Common Stock owned by
Volt in the event the Merger Agreement is terminated (i) by Autologic, if
Autologic enters into an agreement providing for an acquisition of Autologic
based on a Superior Proposal (as defined in the Merger Agreement), or (ii) by
Agfa, if the Board of Autologic withdraws or modifies in a manner adverse to
Agfa its approval of the Merger Agreement or recommends such a Superior
Proposal.
10
Item 7. Purposes of the Transaction and Plans or Proposals
Except for Autologic's obligations pursuant to the Merger Agreement,
Autologic is not undertaking or engaged in any negotiations in response to the
Offer that relate to: (i) a tender offer for or other acquisition of
Autologic's securities by Autologic, any of its subsidiaries, or any other
person; (ii) any extraordinary transaction, such as a merger, reorganization or
liquidation, involving Autologic or any of its subsidiaries; (iii) any
purchase, sale or transfer of a material amount of assets of Autologic or any
of its subsidiaries; or (iv) any material change in the present dividend rate
or policy, or indebtedness or capitalization, of Autologic.
There are no transactions, board resolutions, agreements in principle or
signed contracts entered into in response to the Offer that relate to one or
more of the matters referred to in this Item 7.
Item 8. Additional Information
The Information Statement attached as Annex C to this Statement is being
furnished in connection with the designation by Merger Sub, pursuant to the
terms of the Merger Agreement, of certain persons to be appointed to the Board
other than at a meeting of Autologic's stockholders, and the information
therein is incorporated herein by reference.
11
Item 9. Exhibits
The following Exhibits are filed herewith:
Exhibit
No. Description
------- -----------
(a)(1) Letter to Autologic Stockholders, dated October 3, 2001 (included in
this Statement and being mailed to Stockholders).
(a)(2) Opinion of Morgan Lewis Githens & Ahn, Inc., dated September 24, 2001
(included as Annex A hereto).
(a)(3) Opinion of The Seidler Companies, Incorporated, dated September 24,
2001 (included as Annex B hereto).
(a)(4) Joint Press Release of Autologic and Agfa-Gevaert, dated September 26,
2001 (incorporated by reference to Autologic's Schedule 14D-9 dated
September 26, 2001).
(a)(5) The Offer to Purchase, dated October 3, 2001 (incorporated herein by
reference to Exhibit (a)(1)(A) to the Schedule TO of the Agfa Group
filed on October 3, 2001).
(a)(6) The Letter of Transmittal (incorporated herein by reference to Exhibit
(a)(1)(B) to the Schedule TO of the Agfa Group filed on October 3,
2001).
(e)(1) Agreement and Plan of Merger, dated September 25, 2001, among
Autologic, Agfa and Merger Sub (incorporated by reference to Exhibit
2.1 to Autologic's Current Report on Form 8-K dated September 25, 2001
(date of earliest event reported)).
(e)(2) Stockholder's Agreement, dated September 25, 2001, among Agfa, Merger
Sub, Volt and Autologic (incorporated by reference to Exhibit 2.3 to
Autologic's Current Report on Form 8-K dated September 25, 2001 (date
of earliest event reported)).
(e)(3) Stockholders' Agreement, dated September 25, 2001, among Agfa, Merger
Sub, Autologic, William Shaw, Alvin J. Brunner, Anthony F. Marrelli,
Leroy Bell, EuGene L. Falk, James J. Groberg, Paul H. McGarrell, and
Jerome Shaw (incorporated by reference to Exhibit 2.4 to Autologic's
Current Report on Form 8-K dated September 25, 2001 (date of earliest
event reported)).
(e)(4) Transaction Option Agreement, dated September 25, 2001, between
Autologic and Agfa (incorporated by reference to Exhibit 2.2 to
Autologic's Current Report on Form 8-K dated September 25, 2001 (date
of earliest event reported)).
(e)(5) Lease, dated September 25, 2001, among Volt, Volt Realty and Autologic
(incorporated by reference to Exhibit 10.1 to Autologic's Current
Report on Form 8-K dated September 25, 2001 (date of earliest event
reported)).
(e)(6) The Information Statement of Autologic (included as Annex C hereto).
12
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Statement is true, complete and correct.
Autologic Information International,
Inc.
/s/ Alvin J. Brunner
By: _________________________________
Name: Alvin J. Brunner
Title:President
Dated: October 3, 2001
13
September 24, 2001 Annex A
Board of Directors
Autologic Information International, Inc.
1050 Rancho Conejo Boulevard [LOGO OF MORGAN LEWIS GITHENS & AHN APPEARS HERE]
Thousand Oaks, CA 91320
Gentlemen:
We understand that a newly-formed wholly-owned subsidiary ("Merger Sub") of
Agfa Corporation ("Agfa"), in turn a wholly-owned subsidiary of Agfa-Gevaert
N.V., proposes to purchase all of the outstanding shares of common stock (the
"Common Stock") of Autologic Information International, Inc. (the "Company") in
an all cash transaction (the "Proposed Transaction") for $7.127 per share,
subject to verification by Agfa of the adjustment (as adjusted, the "Offer
Consideration") provided in the Letter of Intent dated August 21, 2001, as
amended September 6, 2001 (the "Letter of Intent") among Agfa, the Company and
Volt Information Sciences, Inc., the owner of approximately 59% of the
outstanding shares of Common Stock of the Company ("Volt"). The terms and
conditions of the Proposed Transaction are set forth in more detail in the
proposed Agreement and Plan of Merger to be entered into among the Company,
Merger Sub and Agfa (the "Merger Agreement").
We further understand that concurrently with the execution of the Merger
Agreement, Volt, the Company, Merger Sub and Agfa will enter into an agreement
pursuant to which Volt will agree to take certain actions to support the
transaction contemplated by the Merger Agreement (the "Volt Stockholder's
Agreement"). In addition, we understand that, concurrently with the execution
of the Merger Agreement, the executive officers and directors of the Company
will enter into an agreement pursuant to which they will agree to take certain
actions to support the transactions contemplated by the Merger Agreement
(collectively with the Volt Stockholder's Agreement, the "Stockholders'
Agreements").
You have requested our opinion, as investment bankers, as to the fairness,
from a financial point of view, to the holders of the Common Stock, of the
Offer Consideration. We will receive a fee for our services upon the rendering
of this opinion that is not contingent on the opinion conclusion or the
consummation of the Proposed Transaction.
In conducting our analysis and arriving at our opinion as expressed herein,
we have reviewed and analyzed, among other things, the following:
(i) the September 21, 2001 drafts of the Merger Agreement and the
Stockholders' Agreements;
(ii) the Letter of Intent;
(iii) the Company's Annual Reports on Form 10-K for each of the fiscal
years in the three year period ended November 3, 2000 and the Company's
Quarterly Report on Form 10-Q for the nine months ended August 5, 2001;
(iv) certain other publicly available information concerning the Company
and the trading market for the Common Stock;
(v) certain internal information and other data relating to the Company,
its business and prospects, including forecasts and projections, provided
to us by management of the Company;
A-1
(vi) certain publicly available information concerning certain other
companies engaged in businesses which we believe to be generally comparable
to the Company and the trading markets for certain of such other companies'
securities; and
(vii) the financial terms of certain recent business combinations which
we believe to be relevant.
We have also met with certain officers and employees of the Company
concerning its business and operations, assets, present condition and prospects
and undertook such other studies, analyses and investigations as we deemed
appropriate. In connection with our engagement, we approached certain third
parties to solicit indications of interest in a possible acquisition of the
Company and held discussions with certain of these parties prior to the date
hereof.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us and have not
attempted independently to verify such information, nor do we assume any
responsibility to do so. We have assumed that the Company's forecasts and
projections provided to or reviewed by us have been reasonably prepared based
on the best current estimates and judgment of the Company's management as to
the future financial condition and results of operations of the Company. We
have not conducted a physical inspection of the properties and facilities of
the Company, nor have we made or obtained any independent evaluation or
appraisal of the assets or liabilities of the Company. We have also taken into
account our assessment of general economic, market and financial conditions and
our experience in similar transactions, as well as our experience in securities
valuation in general. Our opinion necessarily is based upon economic, market,
financial and other conditions as they exist and can be evaluated on the date
hereof and we assume no responsibility to update or revise our opinion based
upon events or circumstances occurring after the date hereof. We reserve,
however, the right to withdraw, revise or modify our opinion based upon
additional information which may be provided to or obtained by us, which
suggests, in our judgment, a material change in the assumptions upon which our
opinion is based.
This letter and the opinion expressed herein are for the use of the Board of
Directors of the Company. This opinion does not address the Company's
underlying business decision to approve the Proposed Transaction or constitute
a recommendation to the stockholders of the Company as to whether or not they
should tender shares pursuant to the Proposed Transaction or how such
stockholders should vote or as to any other action such stockholders should
take regarding the Proposed Transaction. This opinion may not be reproduced,
summarized, excerpted from or otherwise publicly referred to or disclosed in
any manner without our prior written consent, except the Company may include
this opinion in its entirety in any filing by the Company with the Securities
and Exchange Commission or in any materials distributed to its stockholders in
connection with the Proposed Transaction.
Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the Offer Consideration to be received by
the holders of the Common Stock in the Proposed Transaction is fair, from a
financial point of view, to such holders.
Very truly yours,
Morgan Lewis Githens & Ahn, Inc.
By: /s/ J. Buckner Brown
J. Buckner Brown
Managing Director
A-2
Annex B
[LOGO OF THE SEIDLER COMPANIES INCORPORATED APPEARS HERE]
September 24, 2001
The Special Committee of the Board of Directors
c/o AUTOLOGIC INFORMATION INTERNATIONAL, INC.
1050 Rancho Conejo Blvd.
Thousand Oaks, CA 91320
Dear Board Members:
We understand that Autologic Information International, Inc. ("Autologic" or
the "Company") proposes to enter into an Agreement and Plan of Merger (the
"Merger Agreement") with a newly formed wholly-owned subsidiary ("Merger Sub")
of Agfa Corporation ("Agfa"), in turn a wholly-owned subsidiary of Agfa-Gevaert
N.A., pursuant to which Merger Sub is to make a cash offer for all of the
outstanding shares of common stock of Autologic for $7.127 per share, subject
to verification by Agfa of the adjustment (as adjusted, the "Offer
Consideration") provided in the Letter of Intent, dated August 21, 2001, as
amended September 6, 2001 (the "Letter of Intent") among Agfa, the Company and
Volt Information Sciences, Inc., the owner of approximately 59% of the
outstanding shares of common stock of the Company ("Volt"). The offer will be
followed by a merger of Merger Sub with and into Autologic, pursuant to which
Autologic shares of common stock not tendered (other than shares held directly
or indirectly by Autologic, Merger Sub or Agfa and other than shares for which
dissenters' rights are perfected) will be converted into the right to receive
the Offer Consideration. The transaction, as summarized above, is hereinafter
referred to as the "Transaction."
The Special Committee of the Board of Directors of Autologic ("the Special
Committee") has requested our opinion (this "Opinion") with respect to the
fairness, from a financial point of view, of the consideration to be received
by Autologic's stockholders other than Volt. In connection with this Opinion,
we have made such reviews, analyses and inquiries as we have deemed necessary
and appropriate under the circumstances. Among other things, we have:
(i) reviewed the Letter of Intent;
(ii) reviewed the September 21, 2001 drafts of each of the proposed
Merger Agreement; Stockholder's Agreement among Merger Sub, Agfa, Autologic
and Volt; Stockholders' Agreement among Merger Sub, Agfa, Autologic and the
executive officers and directors of Autologic; the Transaction Option
Agreement between Agfa and Autologic; and new Lease Agreement between Volt
Realty Two, Inc. and Autologic (the "New Lease") to replace Autologic's
existing lease of its facility at 1050 Rancho Conejo Boulevard, Thousand
Oaks, California;
(iii) reviewed certain publicly available business, financial and
historical information contained in Autologic's Annual Report on Form 10-K
for its fiscal year ended November 3, 2000 and Quarterly Report on Form 10-
Q for the nine months ended August 5, 2001, each as filed with the
Securities and Exchange Commission;
(iv) reviewed internal financial information and other data prepared by
management of Autologic that are not publicly available relating to the
business and financial prospects of Autologic;
(v) discussed with members of the senior management of Autologic the
business, operations, financial condition and prospects of the Company;
(vi) reviewed certain financial forecasts prepared by the management of
the Company;
(vii) reviewed publicly available financial and stock market data with
respect to certain other companies engaged in businesses we believe to be
generally comparable to that of Autologic (the "Comparables");
B-1
(viii) reviewed the historical market prices and trading volume of
Autologic's common stock and the common stock of the Comparables;
(ix) reviewed financial terms of certain recent business combinations
which we believe to be relevant; and
(x) conducted such other financial studies, analyses and investigations
and considered such other information as we deemed appropriate.
Our engagement and this Opinion are for the benefit of the Special Committee
and the Board of Directors of Autologic, and this Opinion is rendered in
connection with the Special Committee's and Board's consideration of the
Transaction. This Opinion is not intended to be, and does not constitute, a
recommendation to any stockholder as to whether such stockholder should tender
shares of Autologic common stock in connection with, or how such stockholder
should vote on, the Transaction. It is further understood that this Opinion may
not be used for any other purpose, nor may it be reproduced, disseminated,
quoted or referred to at any time, in whole or in part, in any manner or for
any purpose, without our prior written consent; provided, however, that this
Opinion may be included in its entirety in any tender offer material and proxy
statement distributed to the Company's stockholders in connection with the
Transaction and in any related filings with the Securities and Exchange
Commission.
In arriving at our Opinion, we have not performed any physical inspection,
appraisals or valuations of specific assets or liabilities of the Company and
have not been furnished with any such appraisals or valuations, and express no
opinion regarding the liquidation value of the Company. We have assumed, based
on representations of management, that the rental (including costs being borne
by the Company) under the New Lease is equal to or below the market rate.
We have relied upon and assumed the accuracy and completeness of the
financial and other information used by us and have assumed, without
independent verification, that there has been no material change in the assets,
financial condition, business or prospects of the Company since the date of the
most recent financial statements made available to us. With respect to
Autologic's financial projections, we have assumed that they have been
reasonably prepared and reflect the best currently available estimates and
judgments of Autologic's management as to the expected future financial
performance of Autologic. We assume no responsibility for and express no view
as to Autologic's financial projections or the assumptions upon which they are
based.
Without limiting the generality of the foregoing, for the purpose of this
Opinion, we have assumed that the Company is not a party to any pending
transactions outside the ordinary course of business, including external
financing, recapitalizations, acquisitions or merger discussions, other than
the Transaction.
Our opinion is necessarily based on business, economic, market and other
conditions as they exist and can be evaluated by us at the date of this letter.
Events occurring after the date hereof could materially affect the assumptions
used in preparing this Opinion; however, we do not have any obligation to
update, revise or reaffirm this Opinion. We are not expressing any opinion
herein as to the prices at which shares of the Company's common stock have
traded or at which such shares may trade at any future time.
We have also assumed that the Transaction will be consummated in accordance
with the draft Merger Agreement referred to above. Our opinion does not address
the relative merits of the Transaction and the other business strategies that
may have been considered by Autologic's Board of Directors, nor does it address
the Board of Director's decision to proceed with the Transaction. We were not
requested to opine as to, and this Opinion does not in any manner address, the
Company's underlying decision to proceed with or effect the Transaction or
structure thereof.
For our services in rendering this Opinion, the Company will pay us a fee
and indemnify us against certain liabilities. Our fee is not conditioned on the
opinion conclusion or the consummation of the Transaction.
B-2
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Offer Consideration proposed to be received by Autologic's
stockholders in connection with the Transaction is fair, from a financial point
of view, to Autologic's stockholders other than Volt.
Very truly yours,
/s/ The Seidler Companies
Incorporated
The Seidler Companies Incorporated
B-3
Annex C
AUTOLOGIC INFORMATION INTERNATIONAL, INC.
1050 Rancho Conejo Boulevard
Thousand Oaks, California 91320
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14f-1 THEREUNDER
Background Information
This information statement (this "Information Statement") is being mailed on
or about October 3, 2001 as part of the Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9") of Autologic Information
International, Inc., a Delaware corporation ("Autologic"), relating the cash
tender offer being made by Autologic Acquisition Corp., a Delaware corporation
("Merger Sub") and a wholly-owned subsidiary of Agfa Corporation, a Delaware
corporation ("Agfa"), which, in turn, is a wholly-owned subsidiary of Agfa-
Gevaert, N.V., a company organized under the laws of Belgium ("Agfa-Gevaert")
(Agfa-Gevaert, Agfa and Merger Sub are sometimes collectively referred to
herein as the "Agfa Group").
You are receiving this Information Statement in connection with the possible
election of persons designated by Merger Sub to a majority of seats on the
Board of Directors of Autologic (the "Board of Directors" or the "Board").
There will be no vote or other action by stockholders of Autologic in
connection with this Information Statement. Voting proxies regarding shares of
Autologic Common Stock (as defined below) are not being solicited from any
stockholder. You are urged to read this Information Statement carefully. You
are not, however, required to take any action in connection with this
Information Statement.
On September 25, 2001, Autologic, Agfa and Merger Sub entered into an
Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger
Agreement, Merger Sub has commenced a cash tender offer to purchase each issued
and outstanding share of Autologic's common stock, par value $.01 per share
("Autologic Common Stock" or the "Shares"), for $7.127 per Share, net to the
seller in cash (the "Per Share Offer Price"), upon the terms and conditions set
forth in the Agfa Group's Offer to Purchase, dated October 3, 2001, included in
its Tender Offer Statement on Schedule TO filed with the Securities and
Exchange Commission on October 3, 2001 (the "Schedule TO"), and in the related
Letter of Transmittal (which together collectively constitute the "Offer").
The Merger Agreement requires Autologic to cause Merger Sub's designees to
be elected to Autologic's Board of Directors under certain circumstances
described below. Upon completion of the Merger, the directors and officers of
Merger Sub immediately prior to the effective time of the Merger will become
the directors and officers, respectively, of the Surviving Corporation. The
present directors and officers of Merger Sub are listed in Annex I to the
Schedule TO.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-l promulgated thereunder. The information set forth herein
supplements certain information set forth in the Schedule 14D-9. You are urged
to read this Information Statement carefully. You are not, however, required to
take any action in connection with the matters set forth herein.
The Agfa Group commenced the Offer on October 3, 2001. The Offer and
withdrawal rights are currently scheduled to expire at 12:00 midnight, New York
City time, on October 31, 2001, unless the Agfa Group extends it in accordance
with the terms of the Offer.
The information contained in this Information Sub concerning any member of
the Agfa Group and the Agfa Designees (as defined below) has been furnished to
Autologic by the Agfa Group and Autologic assumes no responsibility for the
accuracy of any such information.
C-1
The Agfa Designees to Autologic's Board of Directors
The Merger Agreement provides that, promptly following Merger Sub's
acceptance for payment of and payment for such number of Shares which
represents at least a majority of the issued and outstanding shares of
Autologic Common Stock on a fully diluted basis (the "Offer Closing Date"),
Merger Sub will be entitled to designate such number of directors, rounded up
to the next whole number (and in no event less than a majority of the Board of
Directors) as will give Merger Sub representation on the Board of Directors of
Autologic equal to the product of (x) the number of directors on the Board of
Directors of Autologic (giving effect to any increase in the number of
directors pursuant to this paragraph) and (y) the percentage that such number
of Shares so purchased by Merger Sub bears to the aggregate number of Shares
issued and outstanding on the Offer Closing Date, and Autologic, will promptly
satisfy such percentage by (i) increasing the size of the Board of Directors
Autologic or (ii) using its reasonable best efforts to secure the resignations
of such number of directors as is necessary to enable Merger Sub's designees to
be elected to the Board of Directors. Autologic will take all lawful action
necessary to effect any such election.
The Agfa Designees will be selected by Merger Sub from among the individuals
listed on Annex I to the Schedule TO, each of whom has consented to serve as a
director of Autologic if appointed or elected. None of the Agfa Designees
currently is a director of, or holds any positions with, Autologic. The Agfa
Group has advised Autologic that, to the best of their knowledge, none of the
Agfa Designees or any of their affiliates beneficially owns any equity
securities or rights to acquire any such securities of Autologic nor has any
such person been involved in any transaction with Autologic or any of its
directors, executive officers or affiliates that is required to be disclosed
pursuant to the rules and regulations of the Securities and Exchange Commission
other than with respect to transactions between Agfa, Merger Sub and Autologic
that have been described in the Schedule TO or the Schedule 14D-9.
Certain Information Concerning Autologic
The Autologic Common Stock is the only class of equity securities of
Autologic outstanding that is entitled to vote at a meeting of the stockholders
of Autologic. Each share of Autologic Common Stock is entitled to one vote. As
of the close of business September 25, 2001, there were 5,787,970 Shares issued
and outstanding, or 6,026,770 Shares on a fully diluted basis.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of Autologic Common Stock as of September 25, 2001 by (i) persons known by
Autologic to be beneficial owners of more than 5% of the outstanding shares of
Autologic Common Stock, (ii) the executive officers named in the Summary
Compensation Table set forth below, (iii) the current directors of Autologic
and (iv) all current executive officers and directors of Autologic as a group
and the percentage of shares represented thereby.
Number of Shares
Beneficially Percent of
Beneficial Owner Ownership(1) Class(2)
---------------- ---------------- ----------
Volt Information Sciences, Inc.(3)(4).......... 3,400,100 58.7%
Fidelity International Ltd.(5)................. 372,057 6.4%
FMR Corp.(5)................................... 189,671 3.3%
Summit Capital Management, LLC and John C. Ru-
dolph(6)...................................... 623,683 10.8%
Leroy M. Bell.................................. 3,500(7) *
Alvin J. Brunner............................... 15,000(7) *
EuGene L. Falk................................. 3,000(7) *
James J. Groberg............................... 8,000(7)(8) *
Anthony F. Marrelli............................ 4,100(7) *
Paul H. McGarrell.............................. 3,000(7) *
Jerome Shaw.................................... 6,000(7)(8) *
William Shaw................................... 6,000(7)(8) *
All Executive Officers and Directors as a group
(8 persons)................................... 48,600(7)(8) *
--------
* Less than one percent.
(1) Except as noted, the named beneficial owners have sole voting and
dispositive power over their respective beneficially owned shares.
(2) Asterisk indicates less than 1%. Shares reflected as owned by a person that
are not outstanding, but that are issuable upon exercise of options held by
such person that were exercisable on or within 60 days after September 25,
2001 (without giving effect to the acceleration of vesting of options in
the event of the successful consummation of the Offer), are considered
outstanding for the purpose of computing the percentage of outstanding
Autologic Common Stock that would be owned by the optionee if the options
were exercised, but (except for the calculation of beneficial ownership by
all executive officers and directors as a group) are not considered
outstanding for the purpose of computing the percentage of outstanding
Autologic Common Stock owned by any other person.
(3) Owned of record by NUCO I, Ltd., a wholly owned subsidiary of Volt
Information Sciences, Inc. ("Volt"). The address of both NUCO I, Ltd. and
Volt is 560 Lexington Avenue, New York, New York 10022-2928.
(4) As a result of the Volt Stockholder's Agreement, dated September 25, 2001,
among Volt, Agfa, Merger Sub and Autologic, the Agfa Group may be deemed to
share voting and dispositive power over these Shares with respect to
certain matters covered by the Volt Stockholder's Agreement and to be a
beneficial owner to the Shares beneficially owned by Volt. The address of
Merger Sub and Agfa is 100 Challenger Road, Ridgefield Park, New Jersey
07660 and of Agfa-Gevaert is Septestraat 27, B-2640 Mortsel, Belgium.
(5) Based on information as of December 31, 1999 contained in a Schedules 13G
filed with the Securities and Exchange Commission on February 14, 2000
filed by Fidelity International Limited, Pembroke Hall, 42 Crow Lane,
Hamilton, Bermuda ("FIL"), and FMR Corp., 82 Devonshire Street, Boston,
Massachusetts 02109 ("FMR"). These Schedules reflect that (i) FMR and
Edward C. Johnson 3d each has sole power to dispose of and vote the shares
owned by FMR Corp. and that members of Mr. Johnson's family, including
Abigail Johnson, may be deemed, under the Investment Company Act of 1940,
to form a controlling group with respect to FMR, (ii) a partnership
controlled by Mr. Johnson and members of his family own 39.9% of the voting
power of FIL and (iii) Mr. Johnson is Chairman of FMR and FIL. FIL and FMR
are
C-3
of the view that they are not acting as a "group" for purposes of Section
13(d) of the Securities Exchange Act of 1934, and that they are not required
to attribute to each other beneficial ownership of the securities
beneficially owned by the other. If the Common Stock ownership of FIL and
FMR were combined December 31, 1999, they would have owned an aggregate of
561,728, or 9.7% of the outstanding, shares of Common Stock.
(6) Based on information as of June 30, 2001 contained in a Report on Form 13-F
filed with the Securities and Exchange Commission on July 25, 2001 by
Summit Capital Management, LLC, the manager of which is John C. Rudolf (who
may also be deemed a beneficial owner of such shares). The business address
of each of Summit Management, LLC and Mr. Rudolf is 601 Union Street, Suite
3900, Seattle, Washington 98101.
(7) Includes the following shares issuable upon the exercise of the portion of
options which are exercisable on or within 60 days after September 25, 2001
granted by Autologic to Leroy M. Bell, 3,000; Alvin J. Brunner, 15,000;
EuGene L. Falk, 3,000; James J. Groberg, 8,000; Anthony F. Marrelli, 4,000;
Paul H. McGarrell, 3,000; Jerome Shaw, 6,000; William Shaw, 6,000; and all
executive officers and directors as a group, 48,000. Excludes additional
shares subject to options, the vesting of which will be accelerated if the
Offer is consummated.
(8) Excludes the shares owned by Volt. Messrs. William Shaw, Jerome Shaw and
James J. Groberg are executive officers and directors of Volt and Messrs.
William Shaw and Jerome Shaw are principal stockholders of Volt.
Directors and Executive Officers
Name Age Position with Autologic
---- --- -----------------------
William Shaw.............. 77 Chairman of the Board and Chief Executive Officer
Alvin J. Brunner.......... 56 President and Chief Operating Officer
Anthony F. Marrelli....... 53 Vice President and Chief Financial Officer
Leroy Bell................ 66 Director
EuGene L. Falk............ 57 Director
James J. Groberg.......... 73 Director
Paul H. McGarrell......... 72 Director
Jerome Shaw............... 75 Director
Information About Directors and Executive Officers
WILLIAM SHAW has been Chairman of the Board of Directors and Chief Executive
Officer of Autologic since September 1995, and has served as a director of
Autologic since November 1995. Mr. Shaw is a founder of Volt, serving as its
President and Chairman of the Board for more than the past five years, and has
been employed in executive capacities by Volt and its predecessors since 1950.
He has served as a director of Volt since its formation in 1957.
ALVIN J. BRUNNER has been President and Chief Operating Officer of Autologic
since June 2000 and a director of Autologic since September 2000. Beginning in
1996 until June 2000 he served as Vice President of Americas Operations of
Autologic. He also served as Vice President of Sales from 1990 to 1996 and as a
regional sales manager from 1980 to 1990.
ANTHONY F. MARRELLI joined Autologic as Chief Financial Officer in 1996 and
became Vice President in January 1997. Prior to joining Autologic, he served in
a senior financial capacity for several publicly traded and privately owned
companies from June 1980 to November 1996. From June 1974 to June 1980, Mr.
Marrelli was a practicing accountant with the firm of Coopers & Lybrand. Mr.
Marrelli is a Certified Public Accountant in the State of California.
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LEROY M. BELL has been a director of Autologic since August 1996. Mr. Bell
was a director of Triple-I from 1990 until the Merger and was Vice President of
Customer Support for Triple-I from 1979 until his retirement in 1994. Mr. Bell
has also been President of B & B Vending Machines, Inc. (a vending machine
service company) since July 1995.
EUGENE L. FALK has been a director of Autologic since September 1997. Mr.
Falk has been a Partner in Summit Partners, LLC, a consulting firm, since 1995.
He was formerly Executive Vice President and Chief Operating Officer of Media
Passage, an ad placement service for national advertising, from 1997 to 1999
and Executive Vice President and General Manager of the Los Angeles Times from
1990 to 1996. From 1986 to 1990, he was Executive Vice President and General
Manager of the Philadelphia Inquirer and for the 15-year period prior to that
held numerous operations management positions within Knight-Ridder Newspapers,
Inc.
JAMES J. GROBERG has been a director of Autologic since September 1995. He
has been a Senior Vice President and the Chief Financial Officer of Volt for
more than the past five years. Mr. Groberg is a director of Volt.
PAUL H. McGARRELL has been a director of Autologic since January 1996. Mr.
McGarrell served as President of Autologic from 1987 to 1990, when he retired.
From 1990 until November 1995, Mr. McGarrell acted as a consultant to Autologic
while serving as Chairman of its Board of Directors.
JEROME SHAW has been a director of Autologic since January 1996. He is a
founder of Volt, serving as its Executive Vice President and Secretary for more
than the past five years, and has been employed in executive capacities by Volt
and its predecessors since 1950. He has served as a director of Volt since its
formation in 1957.
William Shaw and Jerome Shaw are brothers. There are no other family
relationships among the directors or executive officers of Autologic.
Meetings of the Board
During the fiscal year ended November 3, 2000, Autologic's Board of
Directors held four meetings. Each incumbent director attended at least 75% of
the total number of meetings of the Board of Directors and committees on which
such director served that were held during fiscal 2000.
Committees of the Board
The Audit Committee of the Board of Directors presently consists of Messrs.
Leroy M. Bell, EuGene Falk and Paul H. McGarrell, each of whom meets the
independence requirements for audit committee members under the listing
standards of the NASDAQ National Market, on which Autologic's Common Stock is
listed. James J. Groberg served on the Audit Committee during Autologic's 2000
fiscal year, but in June 2001, Mr. Falk replaced Mr. Groberg on the Audit
Committee in order to enable Autologic to comply with the requirements of the
NASDAQ National Market. The committee provides assistance to Autologic's
directors in fulfilling the Board's oversight responsibility as to Autologic's
accounting, auditing and financial reporting practices and as to the quality
and integrity of the financial reports of Autologic. The specific functions and
responsibilities of the Audit Committee are set forth in the written charter of
the Audit Committee adopted by the Board of Directors, which is attached as
Appendix A to this Information Statement. The Audit Committee reviews and
reassesses the Autologic's certificate of incorporation and by-laws annually
and recommends any changes to the Board for approval. A report of the Audit
Committee appears under the caption "Audit Committee Report," below. The
committee held two meetings during fiscal 2000.
The Executive Compensation Committee of the Board of Directors, presently
consisting of Messrs. William Shaw, EuGene L. Falk, James J. Groberg and Jerome
Shaw, is authorized to make recommendations regarding the salaries, bonuses and
other compensation arrangements for executive officers of Autologic to the
C-5
entire Board of Directors, which makes the determination. The Executive
Compensation Committee did not meet separate from the entire Board during the
past fiscal year.
Audit Fees
Audit fees billed to Autologic by Ernst & Young, LLP ("Ernst & Young") for
its audit of Autologic's annual financial statements for the year ended
November 3, 2000 and for its review of the financial statements included in
Autologic's Quarterly Reports on Form 10-Q filed with the Securities and
Exchange Commission for that year totaled $185,000.
Financial Information Systems Design and Implementation Fees
Autologic did not engage Ernst & Young to provide advice to Autologic
regarding financial information systems design and implementation during the
fiscal year ended November 3, 2000.
All Other Fees
Fees billed to Autologic by Ernst & Young during Autologic's 2000 fiscal
year for all other non-audit services rendered to Autologic, including tax
related services, totaled $72,000.
In connection with the recently revised standards for independence of
Autologic's independent public accountants promulgated by the Securities and
Exchange Commission, the Audit Committee has considered whether the provision
of such services is compatible with maintaining the independence of Ernst &
Young.
Audit Committee Report
Management has the primary responsibility for Autologic's financial
reporting process, including its financial statements, while the Board is
responsible for overseeing Autologic's accounting, auditing and financial
reporting practices and Autologic's independent public accountants have the
responsibility for the examination of Autologic's annual financial statements,
expressing an opinion on the conformity of those financial statements with
accounting principles generally accepted in the United States and issuing a
report thereon. In assisting the Board in fulfilling its oversight
responsibility with respect to Autologic's year ended November 3, 2000, the
Audit Committee:
. Reviewed and discussed the audited financial statements for the fiscal
year ended November 3, 2000 with management and Ernst & Young,
Autologic's independent public accountants;
. Discussed with Ernst & Young the matters required to be discussed by
Statement on Auditing Standards No. 61 relating to the conduct of the
audit; and
. Received the written disclosures and the letter from Ernst & Young
regarding its independence required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees. The Audit
Committee also discussed Ernst & Young's independence with Ernst & Young
and considered whether the provision of non-audit services rendered by
Ernst & Young was compatible with maintaining its independence under
Securities and Exchange Commission rules governing the independence of a
company's outside auditors.
Based on the foregoing review and discussions, the Audit Committee
recommended to the Board that Autologic's audited financial statements for the
fiscal year ended November 3, 2000 be included in Autologic's Annual Report on
Form 10-K filed with the Securities and Exchange Commission for that year.
Respectfully,
Leroy M. Bell
Paul H. McGarrell
James J. Groberg
C-6
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning compensation for
services rendered in all capacities to Autologic and its subsidiaries during
the fiscal years ended November 3, 2000, October 29, 1999, and October 30, 1998
by Autologic's Chief Executive Officer and each of the other executive officers
of Autologic who received cash compensation in excess of $100,000 during the
fiscal year ended November 3, 2000:
Annual
Compensation Long-Term Compensation
----------------- -----------------------
Securities
Underlying All Other
Principal Position Year Salary(1) Bonus Options(#) Compensation
------------------ ---- --------- ------- ---------- ------------
William Shaw, 2000 --
Chairman of the Board and 1999 -- -- 10,000 --
Chief Executive Officer(2) 1998 -- -- --
Alvin J. Brunner, 2000 $164,023 $25,000 15,000 $91,259
President and Chief
Operating Officer(3)
Anthony F. Marrelli, 2000 $173,052 $ 6,000 -- $ 6,202
Vice President and 1999 159,182 -- 2,500 --
Chief Financial Officer(4) 1998 151,590 12,500 -- --
Dennis D. Doolittle, 2000 $130,099 -- -- $36,895
Vice Chairman of the Board, 1999 205,000 -- 10,000 3,879
President and Chief 1998 202,968 $22,500 -- 3,909
Operating Officer(5)
--------
(1) Includes amounts deferred under Section 401(k) of the Internal Revenue Code
of 1986, as amended.
(2) Except for the options granted by Autologic, all of Mr. Shaw's compensation
has been paid by Volt for services rendered in all capacities to Volt,
which has a number of subsidiaries, including Autologic. It is not feasible
to allocate any portion of Mr. Shaw's compensation from Volt to Autologic
and none is borne by Autologic.
(3) Includes all compensation paid to Mr. Brunner during fiscal 2000. Mr.
Brunner became President of Autologic on June 14, 2000. Prior to that date
he did not serve as an executive officer of Autologic. Other compensation
includes sales commissions ($90,269) and computer reimbursement ($990).
(4) Other compensation includes relocation allowance ($5,000), computer
reimbursement ($990) and travel savings reimbursement ($212).
(5) Mr. Doolittle resigned in June 2000. Other compensation includes vacation
paid at termination ($30,977), automobile ($5,591) and travel savings
reimbursement ($327).
C-7
Option Grants in Last Fiscal Year
The following table contains information concerning options granted during
the year ended November 3, 2000 by Autologic to the executive officers named in
the Summary Compensation Table:
Value at
Assumed
Annual Rates
of Stock
Price
Number of Percent of Appreciation
Shares Total Options for Option
Underlying Granted to Exercise Term(2)
Options Employees in Price Expiration -------------
Name Granted(1) Fiscal Year Per Share Date 5% 10%
---- ---------- ------------- --------- ---------- ------ ----------
Alvin J. Brunner........ 15,000 100% $2.91 6/13/10 27,451 69,567
--------
(1) Of the options, options to purchase 3,000 shares became exercisable
immediately at a price equal to 100% of the market value of the shares on
the date of grant and the balance are exercisable at the rate of 4,000 per
year, on a cumulative basis, commencing one year after the date of grant,
subject to earlier termination at specified times following termination of
employment, death or disability.
(2) These are hypothetical values using assumed compound growth rates
prescribed by the Securities and Exchange Commission and are not intended
to forecast possible future appreciation, if any, in the market price of
Autologic Common Stock.
Aggregated Year-End Option Values
None of the executive officers of Autologic named in the Summary
Compensation Table exercised stock options to purchase shares of Autologic
Common Stock during fiscal 2000. The following table sets forth certain
information as of November 3, 2000 concerning the shares subject to unexercised
options to purchase Autologic Common Stock held at that date by the executive
officers named in the Summary Compensation Table:
Number of Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at Fiscal
Fiscal Year-End Year-End
(Exercisable/ (Exercisable/
Name Unexercisable) Unexercisable)(1)
---- ---------------- -----------------
William Shaw.......................... 11,000/ 8,000(2) $0/0
Alvin J. Brunner...................... 9,000/16,000 $0/0
Anthony F. Marrelli................... 2,000/ 3,000 $0/0
--------
(1) Represents the closing sale price of Autologic Common Stock underlying the
options on The Nasdaq Stock Market's National Market on November 3, 2000,
the last date on which Autologic Common Stock was traded prior to the end
of fiscal 2000, minus the option exercise price.
(2) Options to purchase 9,000 shares of Autologic Common Stock held by Mr. Shaw
at November 3, 2000 terminated unexercised on January 19, 2001.
Renumeration of Directors
Each director who is not regularly employed by either Autologic or Volt
(Messrs. Leroy M. Bell, EuGene L. Falk and Paul H. McGarrell) receives a
director's fee at an annual rate of $15,000 plus $1,000 for each meeting of the
Board of Directors attended other than telephonically. These directors are also
reimbursed by Autologic for their reasonable out-of-pocket expenses incurred in
attending meetings and performing services on behalf of Autologic. During the
year ended November 3, 2000, Autologic paid premiums aggregating $7,513 with
respect to health, disability and life insurance policies maintained by
Autologic for Mr. McGarrell, the former President of Autologic.
C-8
Employment and Termination Agreements
Autologic is a party to an Employment Agreement, dated as of June 14, 2000,
with Alvin J. Brunner which provides for an indefinite term of employment,
subject to termination on four months' notice by either party. Mr. Brunner's
annual salary is presently $210,000. Under his Employment Agreement, Mr.
Brunner may also receive bonuses at the discretion of the Board.
Report of Board of Directors Concerning Executive Compensation
This report is presented by the Board of Directors, which determined the
compensation of all executive officers for fiscal 2000.
To date, Autologic has used a combination of salary as a base for
compensation, bonuses either as incentives or rewards for short- or long-term
performance, and stock options as a means of providing long-term incentives. In
determining an executive's base salary, the Board considered the executive's
performance, level of responsibility and expertise, as well as Autologic's
performance, economic conditions (including the cost of living) and competitive
factors. Bonuses were based on Autologic's performance, as well as the
executive's overall performance, contribution toward Autologic's profitability,
meeting corporate objectives and, in certain instances, meeting specific
corporate goals or completing specific programs or projects. The Board's
decisions were made on a subjective basis without assigning weights to any
particular factor.
Stock options are granted under Autologic's Stock Option Plans as the
primary method of providing long-term incentive compensation to key employees
of Autologic, including directors and executive officers, while conserving
available cash for operations and growth. Autologic believes that stock options
foster the interest of key employees in seeking long-term growth for Autologic,
as well as linking their interests with the overall interests of stockholders.
In determining when to grant options and the size of the award to any
particular executive or key employee, the Board considered factors such as the
executive's or employee's position, level of responsibility, value to
Autologic, future objectives, prior option grants, accomplishments, performance
and other compensation. No one factor was given special weight, but decisions
are made based on an overall assessment of the individual.
Compensation of Chief Executive Officer. Mr. William Shaw serves as
Autologic's Chief Executive Officer, but receives no cash compensation for his
services to Autologic. Mr. Shaw is also the Chairman and President of Volt,
which owns approximately 56.4% of the outstanding Autologic Common Stock on a
fully diluted basis. Autologic has drawn upon the expertise of various key
employees, including Mr. Shaw and other executive officers, of Volt, for which
Autologic has paid limited amounts to Volt (see "Certain Transactions") and no
compensation to the individuals providing such advice and services to
Autologic.
Certain Tax Legislation. Section 162(m) of the Internal Revenue Code of
1986, as amended ("Section 162(m)"), precludes a public company from taking a
federal income tax deduction for annual compensation in excess of $1,000,000
paid to its chief executive officer or any of its four other most highly
compensated executive officers. Certain "performance based compensation" is
excluded from the deduction limitation. The option granted by the Board in
fiscal 2000 to Mr. Brunner is not "performance based compensation" under
Section 162(m). Therefore, any amount that would otherwise be deductible by
Autologic with respect to such options must be taken into account in
determining whether the $1,000,000 Section 162(m) limitation is exceeded at the
time the option is exercised.
Respectfully Submitted,
Leroy M. Bell Paul H. McGarrell
Alvin J. Brunner Jerome Shaw
EuGene L. Falk William Shaw
James J. Groberg
C-9
Performance Graph
The following graph compares the cumulative return to holders of Autologic
Common Stock, assuming they had been holders of common stock of Information
International, Inc. ("Triple-I") (each share of which was automatically
converted into one share of Autologic in the mergers of Autologic and Triple-I
into Autologic on January 29, 1996) from November 1, 1995 until the merger on
January 29, 1996 and of Autologic thereafter with (i) the Nasdaq Stock Market
Index, and (ii) a published industry group index of all other publicly held
companies that are included within the four-digit Standard Industrial Code
(3555) for printing trades machinery and equipment manufacturers, which is
maintained by Media General Financial Services, Inc. (the "SIC Index"). The
comparison assumes $100 was invested on November 1, 1995 in common stock of
Triple-I and in each of the comparison groups, and assumes reinvestment of
dividends (neither Triple-I nor Autologic paid any dividends during the
periods):
[GRAPH APPEARS HERE]
At November 1, 1995 1996 1997 1998 1999 2000
-------------- ---- ---- ---- ---- ---- ----
Autologic Information International, Inc......... 100 55 74 42 23 24
SIC Code Index................................... 100 63 62 30 33 35
NASDAQ Market Index.............................. 100 117 154 174 287 338
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires Autologic's executive officers
and directors, and persons who beneficially own more than 10% of the
outstanding Autologic Common Stock, to file initial reports of ownership, and
reports of changes of ownership, of Autologic's equity securities with the
Securities and Exchange Commission and furnish copies of those reports to
Autologic. Based solely on a review of the copies of the reports furnished to
Autologic to date and written representations that no reports were required,
Autologic believes that all reports required to be filed by such persons with
respect to Autologic's fiscal year ended November 3, 2000 were timely filed.
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CERTAIN TRANSACTIONS
As part of the mergers of Triple-I and Autologic into Autologic on January
29, 1996 (the "1996 Merger"), Autologic entered into a three-year lease with
Volt Realty Two, Inc., a wholly-owned subsidiary of Volt (the "Landlord"),
pursuant to which Autologic has been leasing approximately 134,000 square feet
of space in Thousand Oaks, California, formerly occupied by Autologic, at a
rental which was initially $6.00 per square foot per year, a rental based upon
prevailing rentals charged in the area at the time the merger agreement related
to the 1996 Merger was entered into. Pursuant to the terms of the lease, as
amended, in December 1996, Autologic's Board of Directors established a new
rental rate based on prevailing rates in the general area, which resulted in a
slight decrease in rent. Autologic and the Landlord have continued to operate
under the terms of the lease since its expiration. During fiscal 2000,
Autologic paid rent to the Landlord aggregating $776,000. Autologic is also
obligated to pay all real estate taxes, insurance, utilities and repairs
related to the leased premises. Upon the successful completion of the Offer,
this lease will be replaced by the new lease, dated September 25, 2001, entered
into between Autologic and the Landlord in connection with the entering into of
the Merger Agreement. A description of the lease can be found in the Schedule
14D-9 to which this Information Statement is attached.
Subsequent to the 1996 Merger, which resulted in a reduction of the combined
administrative staffs of Triple-I and Autologic, Volt has continued to provide
certain on-going legal and financial services, for which Autologic pays Volt a
monthly fee of $3,000. Autologic believes this fee is fair and reasonable for
the services provided. In addition, Volt pays certain insurance premiums and
incurs certain other costs on behalf of Autologic and is reimbursed for those
premiums and costs by Autologic, which benefits from Volt's greater purchasing
power. Autologic sells equipment and service to Volt for resale and internal
use. These sales to Volt, if for resale, are priced at approximately 80% of
normal end-user prices and, if for internal use, at normal end-user prices.
Sales to Volt aggregated $98,000 during fiscal 2000.
At November 3, 2000, Volt owed Autologic $45,000, and at February 15, 2001,
Autologic owed Volt $113,000 related to post-1996 Merger activity. These
amounts do not bear interest.
During fiscal year 2000, Autologic's United Kingdom subsidiary agreed to
provide certain on-going financial services to Volt's European subsidiaries,
for which Volt paid Autologic the sum of $64,471. Fees charged for services are
at the same rates charged by Autologic's subsidiary to unaffiliated third
parties.
Autologic believes that each of the foregoing arrangements is on terms and
conditions no less favorable to it than would prevail with unaffiliated third
parties.
C-11
Appendix A
to Information Statement
AUTOLOGIC INFORMATION INTERNATIONAL, INC.
AUDIT COMMITTEE CHARTER
(as amended February 26, 2001)
Organization
There shall be a committee of the Board of Directors known as the Audit
Committee. The Audit Committee shall be composed of three or more directors,
appointed by the Board of Directors, at least two of whom are independent of
the management of Autologic and are free of any relationship that, in the
opinion of the Board of Directors, would interfere with their exercise of
independent judgment as a committee member. Members will be financially
literate and at least one will have accounting or related financial management
expertise. Audit Committee members shall meet the requirements of the listing
standards of the NASDAQ National Market. A majority shall constitute a quorum
of the Audit Committee. A majority of the members in attendance shall decide
any questions brought before any meeting of the Audit Committee.
Statement of Policy
The Audit Committee shall provide assistance to Autologic's directors in
fulfilling the Board's oversight responsibility as to Autologic's accounting,
auditing and financial reporting practices and as to the quality and integrity
of the publicly distributed financial reports of Autologic.
Responsibilities
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to oversee the corporate accounting and reporting
practices of Autologic, relative to internal controls and generally accepted
accounting principles. In so doing, the Audit Committee should maintain free
and open means of communications between the directors, the independent
auditors, the internal auditors, and the financial management of Autologic.
In carrying out its responsibilities, the Audit Committee will:
1. Recommend to the directors the independent auditors to be selected to
audit the financial statements of Autologic and its divisions and
subsidiaries.
2. Have a clear understanding with the independent auditors that they
are ultimately accountable to the Board of Directors and the Audit
Committee.
3. Review the independence and performance of the independent auditors.
4. Meet with the independent auditors and financial management of
Autologic to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion of the
audit, review such audit, including comments or recommendations of the
independent auditors.
5. Review with the independent auditors, Autologic's internal auditor,
and financial and accounting personnel, the adequacy and effectiveness of
the accounting and financial controls of Autologic, and elicit any
recommendations for the improvement of such controls or particular areas
where new or more detailed controls or procedures are desirable. Discuss
with the independent auditors significant financial risk exposures and the
steps management has taken to monitor, control and report such exposures.
6. Review the internal audit function of Autologic, including its
independence, authority, reporting obligations, organizational structure,
staff qualifications and the proposed internal audit plans for the current
year.
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7. Review Autologic's annual audited financial statements prior to
filing or distribution with management and the independent auditors to
determine that the independent auditors are satisfied with the disclosure
and content of the financial statements to be presented to the
shareholders. Any changes in accounting principles should be reviewed.
8. Review with financial management and the independent auditors
Autologic's quarterly financial results, and discuss any significant
changes to Autologic's accounting principles and any items required to be
communicated by the independent auditors in accordance with Statement of
Auditing Standards 61.
9. Review with financial management and the independent auditors their
judgments about the accounting principles employed by Autologic.
10. Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the Audit Committee without members of
management present. Among the items to be discussed in these meetings are
the independent auditors' evaluation of Autologic's financial, accounting,
and auditing personnel, and the cooperation that the independent auditors
received during the course of the audit.
11. Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each Audit Committee meeting with, the
Board of Directors.
12. Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this purpose if,
in its judgment, that is appropriate.
13. Review and reassess the adequacy of this charter at least annually.
Submit this charter to the Board of Directors for approval and have the
document published at least every three years in accordance with Securities
and Exchange Commission regulations.
14. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included in
Autologic's annual proxy statement.
Nothing contained in this charter is intended to, or should be construed as,
creating any responsibility or liability of the members of the Audit Committee
except to the extent otherwise provided under the Delaware law which shall
continue to set the legal standard for the conduct of the members of the
Committee.
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