SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13E-3/A
RULE 13E-3 TRANSACTION STATEMENT
PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
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STV GROUP, INCORPORATED
(Name of the Issuer)
STV GROUP, INCORPORATED
THE EMPLOYEE STOCK OWNERSHIP PLAN OF STV GROUP, INCORPORATED
STVG ACQUISITION, INC.
DOMINICK M. SERVEDIO
MICHAEL HARATUNIAN
PETER W. KNIPE
(Names of Persons Filing Statement)
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COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of Class of Securities)
784847105
(CUSIP Number of Class of Securities)
Richard J. McMahon, Esquire Charles R. Smith, Esquire
Blank Rome Comisky & McCauley LLP Kirkpatrick & Lockhart LLP
One Logan Square 535 Smithfield Street
Philadelphia, PA 19103 Pittsburgh, PA 15222
(215) 569-5500 (412) 355-6500
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(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on Behalf of Persons Filing Statement)
This statement is filed in connection with (check the appropriate box):
[X] a. The filing of solicitation materials or an information
statement subject to Regulation 14A, Regulation 14C or Rule
13e-3(c) under the Securities Exchange Act of 1934.
[ ] b. The filing of a registration statement under the Securities
Act of 1933.
[ ] c. A tender offer.
[ ] d. None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies.
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
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$22,001,762.30 $4,400.36
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* For purposes of calculating fee only. The "Transaction Valuation" amount is
based upon the purchase of 1,476,746 shares of common stock, $.01 par value
("Common Stock"), of STV Group, Incorporated at $11.25, the cash price per
share of Common Stock to be paid in connection with the Rule 13e-3
transaction, and the net amount to be paid to stock option holders in
connection with the Rule 13E-3 transaction. The filing fee equals
one-fiftieth of one percent of the Transaction Value in accordance with Rule
0-11 under the Securities Exchange Act of 1934, as amended.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing:
Amount Previously Paid: $4,517.33
Form or Registration No.: Schedule 13E-3
Filing Parties: STV Group, Incorporated and The Employee Stock
Ownership Plan of STV Group, Incorporated
Date Filed: May 17, 2001
INTRODUCTION
This Amendment No. 3 to the Rule 13e-3 Transaction Statement on
Schedule 13E-3 (this "Schedule 13E-3"), filed with the Securities and Exchange
Commission (the "Commission") by STV Group, Incorporated, a Pennsylvania
corporation (the "Company"), the employee stock ownership plan of the Company
(the "ESOP"), STVG Acquisition, Inc., a Pennsylvania corporation that is
wholly-owned by the ESOP ("Merger Subsidiary"), Dominick M. Servedio, President
and Chief Executive Officer of the Company and a member of the Company's Board
of Directors ("Servedio"), Michael Haratunian, Chairman of the Board of
Directors of the Company ("Haratunian"), and Peter W. Knipe, Secretary,
Treasurer and Chief Financial Officer of the Company ("Knipe"), amends and
restates the Rule 13e-3 Transaction Statement on Schedule 13E-3 filed with the
Commission by the Company and the ESOP on May 17, 2001, as amended and restated
by two separate Amendments thereto filed with the Commission on June 28, 2001
and July 17, 2001, respectively, in connection with the proposed merger (the
"Merger") of Merger Subsidiary with and into the Company pursuant to an
Agreement and Plan of Merger, dated April 30, 2001 (the "Merger Agreement"), by
and between the Company and the ESOP.
The Merger Agreement provides for the Merger of Merger Subsidiary with
and into the Company, with the Company being the surviving corporation (the
"Surviving Corporation"). Upon the effectiveness of the Merger (the "Effective
Time"), each share of common stock, $.01 par value per share, of the Company
(the "Common Stock"), issued and outstanding immediately prior to the Effective
Time (other than shares held by the ESOP, by the Company or any of its
subsidiaries as treasury stock, and shares held by dissenting shareholders who
have validly exercised and perfected their appraisal rights under Pennsylvania
law) will be converted into the right to receive $11.25 in cash, without
interest, (the "Merger Consideration"). Each share of common stock of Merger
Subsidiary issued and outstanding immediately prior to the Effective Time will
automatically be cancelled.
This Schedule 13E-3 is being filed with the Commission concurrently
with a definitive proxy statement filed by the Company (the "Proxy Statement")
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). A copy of the Proxy Statement is attached hereto as
Exhibit (a)(1). The information contained in the Proxy Statement, including all
exhibits thereto, is expressly incorporated herein by reference and the
responses to each item are qualified in their entirety by reference to the
information contained in the Proxy Statement and the exhibits thereto.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Proxy Statement. The item numbers and
corresponding captions listed in this Schedule 13E-3 refer to the items required
under Rule 13e-100; the subsections and corresponding captions listed under
certain items refer to subsections of items under Regulation M-A to which the
Schedule 13E-3 item refers. All references to rules and regulations herein
pertain to rules and regulations promulgated under the Exchange Act.
The filing of this Schedule 13E-3 shall not be construed as an
admission by the ESOP, Merger Subsidiary, Servedio, Haratunian or Knipe that the
Company is "controlled" by such persons, individually or collectively, or that
any such person is an "affiliate" of the Company within the meaning of Rule
13e-3.
ITEM 1. SUMMARY TERM SHEET.
The information contained in the sections of the Proxy Statement
entitled "SUMMARY TERM SHEET" and "QUESTIONS AND ANSWERS ABOUT THE MERGER" is
hereby incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) NAME AND ADDRESS. The information contained in the section of the
Proxy Statement entitled "SUMMARY - The Companies" is hereby incorporated herein
by reference.
(b) SECURITIES. The information contained in the section of the Proxy
Statement entitled "INTRODUCTION" is hereby incorporated herein by reference.
(c) TRADING MARKET AND PRICE. The information contained in the section
of the Proxy Statement entitled "PRICE RANGE OF COMMON STOCK" is hereby
incorporated herein by reference.
(d) DIVIDENDS. The information contained in the section of the Proxy
Statement entitled "DIVIDENDS" is hereby incorporated herein by reference.
(e) PRIOR PUBLIC OFFERINGS. None.
(f) PRIOR STOCK PURCHASES. The information contained in the section of
the Proxy Statement entitled "COMMON STOCK PURCHASE INFORMATION" is hereby
incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS.
(a)-(c) NAME AND ADDRESS; BUSINESS AND BACKGROUND OF ENTITIES; BUSINESS
AND BACKGROUND OF NATURAL PERSONS. This Statement is being filed by the Company,
the ESOP, Merger Subsidiary, Servedio, Haratunian and Knipe. The Company is the
issuer of the Common Stock which is the subject of the Rule 13e-3 transaction.
The ESOP is the employee stock ownership plan of the Company. Under the rules
governing "going private" transactions, the ESOP may be deemed to be an
"affiliate" of the Company. Merger Subsidiary is wholly-owned by the ESOP and is
the entity that will merge with and into the Company in connection with the Rule
13e-3 transaction. Servedio is the President and Chief Executive Officer of the
Company and a member of the Company's Board of Directors, Haratunian is the
Chairman of the Board of Directors of the Company, and Knipe is the Secretary,
Treasurer and Chief Financial Officer of the Company. The information contained
in the sections of the Proxy Statement entitled "SUMMARY -- The Companies,"
"INFORMATION ABOUT THE ESOP," "DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY"
and "INFORMATION ABOUT MERGER SUBSIDIARY" is hereby incorporated herein by
reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a)(1) TENDER OFFERS. Not applicable.
(a)(2)(i) TRANSACTION DESCRIPTION. The information contained in the
sections of the Proxy Statement entitled "QUESTIONS AND ANSWERS ABOUT THE
MERGER," "SUMMARY" and "THE MERGER AND RELATED MATTERS -- THE MERGER AGREEMENT"
is hereby incorporated herein by reference.
(a)(2)(ii) CONSIDERATION. The information contained in the section of
the Proxy Statement entitled "THE MERGER AND RELATED MATTERS -- THE MERGER
AGREEMENT -- Effect on Capital Stock" is hereby incorporated herein by
reference.
(a)(2)(iii) REASONS FOR TRANSACTION. The information contained in the
sections of the Proxy Statement entitled "THE MERGER AND RELATED MATTERS --
SPECIAL FACTORS -- Recommendations of the Special Committee and Board of
Directors; Fairness of the Merger" and "--Purpose and Structure of the Merger"
is hereby incorporated herein by reference.
(a)(2)(iv) VOTE REQUIRED FOR APPROVAL. The information contained in the
section entitled "THE SPECIAL MEETING -- Voting Information" in the proxy
statement is hereby incorporated herein by reference.
(a)(2)(v) DIFFERENCES IN THE RIGHTS OF SECURITY HOLDERS. The
information contained in the sections of the Proxy Statement entitled "THE
MERGER AND RELATED MATTERS -- SPECIAL FACTORS -- Interests of Certain STV
Directors, Officers and Shareholders in the Merger," "--Effects of the Merger"
and "THE MERGER AND RELATED MATTERS -- THE MERGER AGREEMENT -- Effect on Capital
Stock" is hereby incorporated herein by reference.
(a)(2)(vi) ACCOUNTING TREATMENT. The information contained in the
section of the Proxy Statement entitled "THE MERGER AND RELATED MATTERS --
SPECIAL FACTORS -- Accounting Treatment of the Merger" is hereby incorporated
herein by reference.
(a)(2)(vii) INCOME TAX CONSEQUENCES. The information contained in the
section of the Proxy Statement entitled "THE MERGER AND RELATED MATTERS --
SPECIAL FACTORS -- Material Federal Income Tax Consequences to STV, the ESOP
Participants and Public Shareholders" is hereby incorporated herein by
reference.
(c) DIFFERENT TERMS. The information contained in the sections of the
Proxy Statement entitled "THE MERGER AND RELATED MATTERS -- SPECIAL FACTORS --
Interests of Certain STV Directors, Officers and Shareholders in the Merger,"
"--Effects of the Merger" and "THE MERGER AND RELATED MATTERS -- THE MERGER
AGREEMENT - Effect on Capital Stock" is hereby incorporated herein by reference.
(d) APPRAISAL RIGHTS. The information contained in the section of the
Proxy Statement entitled "THE MERGER AND RELATED MATTERS-- DISSENTERS' RIGHTS OF
APPRAISAL" is hereby incorporated herein by reference.
(e) PROVISIONS FOR UNAFFILIATED SECURITY HOLDERS. No provisions have
been made in connection with the Merger to grant unaffiliated security holders
access to STV's corporate files or to obtain counsel or appraisal services at
STV's expense.
(f) ELIGIBILITY FOR LISTING OR TRADING. Not applicable.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a) TRANSACTIONS. The information contained in the section of the Proxy
Statement entitled "DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY" is hereby
incorporated herein by reference.
(b), (c) SIGNIFICANT CORPORATE EVENTS; NEGOTIATIONS OR CONTACTS. The
information contained in the section of the Proxy Statement entitled "THE MERGER
AND RELATED MATTERS -- SPECIAL FACTORS -- Discussions with Potential Acquirors"
is hereby incorporated herein by reference.
(e) AGREEMENTS INVOLVING THE SUBJECT COMPANY'S SECURITIES. The
information contained in the section of the Proxy Statement entitled "THE MERGER
AND RELATED MATTERS -- SPECIAL FACTORS -- Interests of Certain STV Directors,
Officers and Shareholders in the Merger" is hereby incorporated herein by
reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(b) USE OF SECURITIES ACQUIRED. The information contained in the
section of the Proxy Statement entitled "THE MERGER AND RELATED MATTERS -- THE
MERGER AGREEMENT -- Effect on Capital Stock" is hereby incorporated herein by
reference.
(c) PLANS. The information contained in the sections of the Proxy
Statement entitled "THE MERGER AND RELATED MATTERS -- SPECIAL FACTORS -- Effects
of the Merger," "-- Interests of Certain STV Directors, Officers and
Shareholders in the Merger," "-- Financing for the Merger," "INFORMATION ABOUT
MERGER SUBSIDIARY" and "DIVIDENDS" is hereby incorporated herein by reference.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a), (c) PURPOSES; REASONS. The information contained in the sections
of the Proxy Statement entitled "THE MERGER AND RELATED MATTERS -- SPECIAL
FACTORS -- Recommendations of the Special Committee and Board of Directors;
Fairness of the Merger" and "-- Purpose and Structure of the Merger" is hereby
incorporated herein by reference.
(b) ALTERNATIVES. The information contained in the section of the Proxy
Statement entitled "THE MERGER AND RELATED MATTERS -- SPECIAL FACTORS
- --Discussions with Potential Acquirors" is hereby incorporated herein by
reference.
(d) EFFECTS. The information contained in the sections of the Proxy
Statement entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER," "THE MERGER AND
RELATED MATTERS -- SPECIAL FACTORS -- Purpose and Structure of the Merger," "--
Effects of the Merger," "-- Interests of Certain STV Directors, Officers and
Shareholders in the Merger," "-- Accounting Treatment of the Merger," "--
Material Federal Income Tax Consequences to STV, the ESOP and Public
Shareholders," "THE MERGER AND RELATED MATTERS -- DISSENTERS' RIGHTS OF
APPRAISAL," "THE MERGER AND RELATED MATTERS -- THE MERGER AGREEMENT" and "FEES
AND EXPENSES" is hereby incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a), (b) FAIRNESS; FACTORS CONSIDERED IN DETERMINING FAIRNESS. The
information contained in the sections of the Proxy Statement entitled "QUESTIONS
AND ANSWERS ABOUT THE MERGER," "SUMMARY - Our Recommendations to Public
Shareholders; Fairness of the Merger," "-- Fairness Opinion," "THE SPECIAL
MEETING -- Voting Information," "THE MERGER AND RELATED MATTERS -- SPECIAL
FACTORS -- Recommendations of the Special Committee and Board of Directors;
Fairness of the Merger" and "-- Opinion of Financial Advisor to the Special
Committee," in Appendix B of the Proxy Statement (Opinion of Houlihan Lokey
Howard & Zukin Financial Advisors, Inc.), and in Exhibit 1 to the Letter to ESOP
Participants from LaSalle Bank, N.A., Trustee of the ESOP, dated July 24, 2001
(Opinion of Willamette Management Associates) is hereby incorporated herein by
reference.
(c) APPROVAL OF SECURITY HOLDERS. The information contained in the
sections of the Proxy Statement entitled "THE SPECIAL MEETING -- Voting
Information" and "THE MERGER AND RELATED MATTERS -- SPECIAL FACTORS -- Purpose
and Structure of the Merger" is hereby incorporated herein by reference.
(d) UNAFFILIATED REPRESENTATIVE. The information contained in the
sections of the Proxy Statement entitled "SUMMARY -- Our Recommendations to
Public Shareholders; Fairness of the Merger," "-- Fairness Opinion," "THE MERGER
AND RELATED MATTERS -- SPECIAL FACTORS -- Background of the Merger" and "--
Recommendations of the Special Committee and Board of Directors; Fairness of the
Merger" is hereby incorporated herein by reference.
(e) APPROVAL OF DIRECTORS. The information contained in the sections of
the Proxy Statement entitled "SUMMARY -- Our Recommendations to Public
Shareholders; Fairness of the Merger," "THE MERGER AND RELATED MATTERS --
SPECIAL FACTORS -- Background of the Merger" and "-- Recommendations of the
Special Committee and Board of Directors; Fairness of the Merger" is hereby
incorporated herein by reference.
(f) OTHER OFFERS. The information contained in the section of the Proxy
Statement entitled "THE MERGER AND RELATED MATTERS -- SPECIAL FACTORS -
Discussions with Potential Acquirors" is hereby incorporated herein by
reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
(a)-(c) REPORT, OPINION OR APPRAISAL; PREPARER AND SUMMARY OF THE
REPORT, OPINION OR APPRAISAL; AVAILABILITY OF DOCUMENTS. The information
contained in the sections of the Proxy Statement entitled "SUMMARY - Fairness
Opinion," "THE MERGER AND RELATED MATTERS -- SPECIAL FACTORS -- Background of
the Merger," " -- Recommendations of the Special Committee and Board of
Directors; Fairness of the Merger," " -- Opinion of Financial Advisor to the
Special Committee" and "-- Opinion of Financial Advisor to Trustee of the ESOP,"
in Appendix B of the Proxy Statement (Opinion of Houlihan Lokey Howard & Zukin
Financial Advisors, Inc.), and in Exhibit 1 to the Letter to ESOP participants
from LaSalle Bank N.A., Trustee of the ESOP, dated July 24, 2001 (Opinion of
Willamette Management Associates) is hereby incorporated herein by reference.
ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a), (b), (d) SOURCE OF FUNDS; CONDITIONS; BORROWED FUNDS. The
information contained in the section of the Proxy Statement entitled "THE MERGER
AND RELATED MATTERS -- SPECIAL FACTORS -- Financing for the Merger" is hereby
incorporated herein by reference. The Company has no alternative financing
arrangements or alternative financing plans if the primary financing is not
available.
(c) EXPENSES. The information contained in the section of the Proxy
Statement entitled "FEES AND EXPENSES" is hereby incorporated herein by
reference.
ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) SECURITIES OWNERSHIP. The information contained in the section of
the Proxy Statement entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT" is hereby incorporated herein by reference.
(b) SECURITIES TRANSACTIONS. The information contained in the section
of the Proxy Statement entitled "COMMON STOCK PURCHASE INFORMATION" is hereby
incorporated herein by reference.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
(d) INTENT TO TENDER OR VOTE IN A GOING-PRIVATE TRANSACTION. The
information contained in the sections of the Proxy Statement entitled "QUESTIONS
AND ANSWERS ABOUT THE MERGER," "SUMMARY - Record Date, Voting Power," and "THE
SPECIAL MEETING -- Voting Information" is hereby incorporated herein by
reference.
(e) RECOMMENDATIONS TO OTHERS. The information contained in the
sections of the Proxy Statement entitled "SUMMARY - Our Recommendation to Public
Shareholders; Fairness of the Merger" and "THE MERGER AND RELATED MATTERS --
SPECIAL FACTORS -- Recommendations of the Special Committee and Board of
Directors; Fairness of the Merger" is hereby incorporated herein by reference.
ITEM 13. FINANCIAL STATEMENTS.
(a) FINANCIAL INFORMATION. The information contained in the sections of
the Proxy Statement entitled "SELECTED CONSOLIDATED FINANCIAL DATA," and
"FINANCIAL INFORMATION FOR SIX MONTHS ENDED MARCH 31, 2001" and the financial
information contained in the Company's Annual Report on Form 10-K for fiscal
year ended September 30, 2000, filed with the Commission on December 29, 2000,
is hereby incorporated herein by reference.
(b) PRO FORMA INFORMATION. The information contained in the section of
the Proxy Statement entitled "UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS" is hereby incorporated herein by reference.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a), (b) SOLICITATIONS OR RECOMMENDATIONS; EMPLOYEES AND CORPORATE
ASSETS. The information contained in the sections of the Proxy Statement
entitled "QUESTIONS AND ANSWERS ABOUT THE MERGER," "THE MERGER AND RELATED
MATTERS -- SPECIAL FACTORS -- Background of the Merger," "THE SPECIAL MEETING
- --Solicitation; Revocation and Use of Proxies" and "FEES AND EXPENSES" is hereby
incorporated herein by reference.
ITEM 15. ADDITIONAL INFORMATION.
(b) OTHER MATERIAL INFORMATION. None.
ITEM 16. EXHIBITS.
*(a)(1) Definitive Proxy Statement in connection with
Special Meeting of Shareholders of STV Group,
Incorporated to be held August 29, 2001, as
amended and filed with the Commission on July 25,
2001.
(a)(2) Letter to ESOP participants from LaSalle Bank,
N.A., Trustee of the ESOP, dated July 24, 2001
(the "ESOP Letter").
***(a)(3) Informational booklet regarding the 13e-3
transaction that was distributed to employees of
STV Group, Incorporated on May 3, 2001.
+(a)(4) Letter announcing the 13e-3 transaction that was
distributed to employees of STV Group,
Incorporated on May 1, 2001.
**(b) Fleet National Bank Commitment Letter dated April
27, 2001.
*(c)(1) Opinion of Houlihan, Lokey, Howard & Zukin
Financial Advisors, Inc. (incorporated herein by
reference to Appendix B of the Proxy Statement).
**(c)(2) Presentation by Houlihan, Lokey, Howard & Zukin
Financial Advisors, Inc. to the Special Committee
and the Board of Directors of STV on April 30,
2001.
(c)(3) Opinion of Willamette Management Associates
(incorporated herein by reference to Exhibit 1 to
the ESOP Letter).
++(c)(4) Presentation by Willamette Management Associates
to the Trustee dated April 23, 2001.
*(d)(1) Agreement and Plan of Merger, dated April 30,
2001, by and between STV and the ESOP
(incorporated herein by reference to Appendix A of
the Proxy Statement).
*(f) Subchapter 15D of the Pennsylvania Business
Corporation Law (incorporated herein by reference
to Appendix C of the Proxy Statement).
(g) Not applicable.
(h) Not applicable.
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* Incorporated by reference to the Schedule 14A Information Statement filed
with the Commission on July 25, 2001.
** Filed previously as an Exhibit to the Schedule 13E-3 filed with the
Commission on May 17, 2001.
*** Incorporated by reference to the Schedule 14A Information Statement filed
with the Commission on May 3, 2001.
+ Incorporated by reference to the Schedule 14A Information Statement filed
with the Commission on May 1, 2001.
++ Filed previously as an Exhibit to the Schedule 13E-3/A filed with the
Commission on June 28, 2001.
SIGNATURES
After due inquiry and to the best of each of the undersigned's
knowledge and belief, each of the undersigned hereby certify that the
information set forth in this statement is true, complete and correct.
STV GROUP, INCORPORATED
By: /s/ Dominick M. Servedio
------------------------------------------
Dominick M. Servedio
President and Chief Executive Officer
LASALLE BANK, N.A., TRUSTEE OF THE
EMPLOYEE STOCK OWNERSHIP PLAN OF STV
GROUP, INCORPORATED
By: /s/ E. Vaughn Gordy
------------------------------------------
E. Vaughn Gordy
Senior Vice President
STVG ACQUISITION, INC.
By: /s/ Caroline Struebing Lascek
------------------------------------------
Caroline Struebing Lascek
Incorporator
DOMINICK M. SERVEDIO, President and Chief
Executive Officer of STV Group, Incorporated
/s/ Dominick M. Servedio
---------------------------------------------
MICHAEL HARATUNIAN, Chairman of the Board of
STV Group, Incorporated
/s/ Michael Haratunian
---------------------------------------------
PETER W. KNIPE, Secretary, Treasurer and Chief
Financial Officer of STV Group, Incorporated
/s/ Peter W. Knipe
---------------------------------------------
Dated: July 25, 2001
EXHIBIT (a)(2)
TRUSTEE LETTER TO ESOP PARTICIPANTS
LaSalle Bank N.A.
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LASALLE BANKS
135 South LaSalle Street
Chicago, Illinois 60603
(312) 904-2000
Trust and Asset Management
Trust and Asset Management
To: Participants in the Employee Stock Ownership Plan of STV Group,
Incorporated
Re: Instructing the Trustee on the Voting of STV Group, Incorporated Common
Stock at the Special Meeting of Shareholders Scheduled for August 29,
2001.
Dear Participant:
LaSalle Bank N.A. ("LaSalle") has been appointed Trustee of the Employee
Stock Ownership Plan of STV Group, Incorporated (the "ESOP"). LaSalle will
oversee the process by which participants in the ESOP are given the opportunity
to direct the voting of the STV Group, Incorporated common stock (the "Common
Stock") held under the ESOP and allocated to their individual accounts on the
proposed transactions described in the STV Group, Incorporated Proxy Statement
dated July 24, 2001 (the "Proposed Transaction").
PROXY MATERIAL
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In connection with the Proposed Transaction, you will be receiving with this
letter the following:
(i) A copy of the STV Group, Incorporated Proxy Statement dated July 24,
2001, including a Notice of a Special Meeting of Shareholders of STV
Group, Incorporated to be held on August 29, 2001; and
(ii) One Voting Instruction Card to be completed with respect to the shares
of Common Stock allocated to your individual account under the ESOP.
The foregoing items are referred to in this letter as the "Proxy Material".
LASALLE ENCOURAGES YOU TO STUDY THE PROXY MATERIAL BEFORE DECIDING HOW TO
VOTE ON THE PROPOSED TRANSACTION.
ESOP PARTICIPANT VOTING DIRECTION PROVISIONS
--------------------------------------------
The ESOP provides that each participant is entitled to direct LaSalle, as
Trustee of the ESOP, how to vote the shares of Common Stock allocated to his or
her individual account pursuant to the ESOP. A Voting Instruction Card has been
included as part of the Proxy Material for this purpose. IF YOU WISH TO DIRECT
LASALLE WITH RESPECT TO THE PROPOSED TRANSACTION, LASALLE MUST RECEIVE YOUR
COMPLETED VOTING INSTRUCTION CARD BY AUGUST 22, 2001.
AFTER YOU HAVE DECIDED HOW TO VOTE, YOU SHOULD RETURN YOUR COMPLETED VOTING
INSTRUCTION CARD TO LASALLE BY U.S. MAIL IN THE ENVELOPE ENCLOSED WITH THE PROXY
MATERIAL. PROCEDURES HAVE BEEN ESTABLISHED TO MAINTAIN THE CONFIDENTIALITY OF
YOUR VOTE. HOW YOU VOTE OR WHETHER YOU VOTE, WILL NOT BE DISCLOSED TO STV GROUP,
INCORPORATED OR ANY OF ITS AFFILIATES. AS THE VOTING INSTRUCTION CARDS ARE
RECEIVED, THEY WILL BE KEPT IN THE CUSTODY OF LASALLE. LASALLE WILL TABULATE THE
DIRECTIONS AND, BASED UPON THE TABULATION, VOTE THE ALLOCATED COMMON STOCK HELD
UNDER THE ESOP.
In accordance with LaSalle's customary procedures, LaSalle makes no
recommendation on how you should direct it to vote on the Proposed Transaction.
You should understand that the actions of LaSalle with respect to voting the
Common Stock held in the ESOP are governed by the fiduciary duties and
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Although the law is not entirely clear on how the ERISA fiduciary
duties apply with respect to the voting of employer securities, the United
States Department of Labor (the "DOL") has informally stated certain standards
that it believes a fiduciary should follow. Based on the standards stated by the
DOL, and on the advice of its legal counsel, LaSalle will vote the shares of
allocated Common Stock held in the
Member of the ABN AMRO Group
LaSalle Bank N.A.
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LASALLE BANKS
ESOP in accordance with the instructions of the participants entitled to direct
LaSalle unless it concludes that to do so would be improper or contrary to
ERISA.
In determining whether to follow participant directions, LaSalle will
consider whether participants have received necessary and accurate information
in order to allow them to make an informed decision as to how to vote and if the
participants were subject to undue influence in making their decisions. If
LaSalle determines not to follow participant directions, it will exercise its
own fiduciary judgment in determining how to vote the shares of Common Stock
held in the ESOP.
LaSalle retained Willamette Management Associates ("Willamette"), an
independent financial advisory firm, to act solely on behalf of the ESOP in
connection with the negotiation of the terms of the Proposed Transaction, and to
prepare an opinion concerning the fairness of the Proposed Transaction, from a
financial point of view. Based upon its review, it is Willamette's opinion that:
i) the consideration to be paid by STV Group, Incorporated for the Common Stock
not owned by the ESOP is not greater than the fair market value of such Common
Stock; ii) the fair market value of the Common Stock owned by the ESOP
immediately after the consummation of the Proposed Transaction is at least equal
to the fair market value of the Common Stock owned by the ESOP immediately prior
to the consummation of the Proposed Transaction; and iii) the terms and
conditions of the Proposed Transaction, including the debt incurred by STV
Group, Incorporated to complete the Proposed Transaction, are fair to the ESOP
from a financial point of view. A complete copy of Willamette's opinion dated
April 30, 2001 is attached hereto as Exhibit 1 and is incorporated herein by
reference.
If you have any concern that you are being subjected to undue influence to
vote in a particular manner with respect to the Proposed Transaction, please
immediately contact LaSalle's ESOP Trustee Services Department by either phone
or email. Dial 1-800-246-5761, Select Option #2 and ask for ESOP Trustee
Services or email to vaughn.gordy@abnamro.com.
-------------------------
Your vote is important. We encourage you to carefully review the Proxy
Material and Willamette's opinion and to return your completed Voting
Instruction Card in a timely manner.
With respect to any allocated shares of Common Stock for which timely
complete instructions are not received, LaSalle shall, subject to ERISA, vote
such shares in favor of the Proposed Transaction. With respect to shares of
Common Stock that are not allocated to a participant's account, LaSalle shall,
subject to ERISA, vote such shares as directed by the Administrator of the ESOP.
DISSENTERS' RIGHTS
------------------
As described more fully in the Proxy Material, Pennsylvania law provides that
in addition to voting against the merger, which is part of the Proposed
Transaction, a record holder of shares may exercise dissenters' rights.
Pennsylvania law provides that unless a record holder of shares consents, a
beneficial owner of shares, such as an ESOP participant, may not assert
dissenters' rights. Based upon the advice of its financial and legal advisors
and its own review of the Proposed Transaction, LaSalle has determined that it
will not permit any of the ESOP participants to be treated as a dissenting
shareholder under Pennsylvania law. This decision should not be read as a
recommendation as to how you should vote on the Proposed Transaction.
YOUR VOTING INSTRUCTION CARD AND OTHER COMMUNICATIONS
-----------------------------------------------------
WILL BE KEPT CONFIDENTIAL
-------------------------
Your Voting Instruction Card and any other communications you have with
LaSalle will be held in confidence by LaSalle and will not be released or
divulged to anyone, except as required by law.
Sincerely,
LaSalle Bank, N.A. in its capacity as
Trustee of the Employee Stock Ownership
Plan of STV Group, Incorporated
Member of the ABN AMRO Group
EXHIBIT I
[graphic]
Willamette Management Associates
8600 West Bryn Mawr Avenue, Suite 950-N
Chicago, Illinois 60631-3505
773 - 399 - 4300 / (Fax) 773 - 339 - 4310
April 30, 2001
LaSalle Bank N.A.
Trustee of the STV Group, Inc.
Employee Stock Ownership Plan
135 South LaSalle Street
Chicago, IL 60603
Dear Trustee:
Willamette Management Associates ("Willamette") has been retained by LaSalle
Bank N.A., in its capacity as the trustee (the "Trustee") of the STV Group, Inc.
("STV" or the "Company") Employee Stock Ownership Trust, which forms a part of
and implements the STV Employee Stock Ownership Plan (the "ESOP") to determine,
among other things, whether the transaction described below is fair to the ESOP
from a financial point of view.
Pursuant to the Agreement and Plan of Merger ("the Merger Agreement") dated
April 30, 2001, the Company and Newco, a corporation formed by the ESOP will
merge into the Company. As part of the merger, all of the outstanding publicly
owned shares of STV, other than those shares owned by the ESOP, will be cashed
out for $16,278,750, or $11.25 per share, based on 1,447,000 non-ESOP shares
outstanding. In addition, the Company will purchase all of the 1,082,980 stock
options outstanding at $11.25 per share less each option's exercise price, or
$6,675,064 in aggregate (the "Stock Option Buyout"). STV will also payout
$4,809,000 to terminate its obligation associated with the Company's
Supplemental Employee Retirement Plan ("SERP"). As a consequence of the merger,
the ESOP will own 100 percent of the equity of the Company and the Company will
elect to be taxed as an S-Corporation under the Internal Revenue Service. The
above referenced transactions, together with any related transactions, are
collectively referred to as the "Transaction."
To finance the Transaction, including the purchase of non-ESOP stock, the
Stock Option Buyout, and the payout of the SERP obligation, the Company will
borrow $27.0 million at an initial interest rate of the Libor rate plus 300
basis points. The Company has also obtained a $7.0 million revolving credit
facility.
In our capacity as your independent financial advisor, you have specifically
asked us to render a written opinion (the "Opinion") as to whether:
1. the consideration to be paid by the Company to the non-ESOP shareholders
for their stock pursuant to the Transaction is not greater than the fair
market value of such shares;
2. the fair market value of the shares of the Company owned by the ESOP
immediately after the consummation of the Transaction is at least equal to
the fair market value of the shares of the Company owned by the ESOP
immediately prior to the consummation of the Transaction; and
3. the terms and conditions of the Transaction, including the debt incurred
by the Company to complete the Transaction, are fair to the ESOP from a
financial point of view.
In undertaking our engagement, our focus was directed to the valuation issues
arising from Section 3(18) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which defines the term "adequate consideration" as
the fair market value of an asset determined by a fiduciary in good faith.
Pursuant to the Department of Labor Proposed Regulation Section 2510.3-18(b)(2),
fair market value is defined as the price at which an asset would change hands
between a willing buyer and a willing seller when the former is not under any
compulsion to buy and the latter is not under any compulsion to sell, both
parties are able, as well as willing, to trade and are well informed about the
asset and the market for that asset.
San Francisco, California o Portland, Oregon o Chicago, Illinois o New York,
New York o McLean, Virginia o Atlanta, Georgia
STV provides engineering, architectural consulting, and design services on a
variety of public projects in areas such as rail transportation, civil, highway,
bridge, airport, and port engineering, architectural and facilities engineering,
construction management and design/build, and systems and process engineering.
Since 1968, the STV common stock has been publicly traded. STV is currently
traded on the National Association of Securities Dealers Automated Quotation
(NASDAQ) under the ticker symbol STVI. The price for STV stock as of April 30,
2001 is $6.09 per share. STV employed 1,228 people and generated operating
revenue of $113.5 million as of the fiscal year ended September 30, 2000.
Willamette is one of the nation's leading independent financial advisory and
business valuation firms. Willamette's principal business is the valuation of
businesses and business interests, including both closely-held and publicly
traded companies, for all purposes, including employee stock ownership plans,
mergers and acquisitions, divestitures, public offerings, gift and estate taxes,
corporate and partnership recapitalizations, dissolutions and other objectives.
Willamette has provided financial advisory services for more than 300 ESOP and
other employee benefit plan clients. Willamette is independent of the parties to
the Transaction (other than the ESOP) within the meaning of Department of Labor
Proposed Regulation 29 CFR 2510.3-18(b) and section 401(a)(28)(C) of the
Internal Revenue Code of 1986, as amended.
In connection with this Opinion, we have made such reviews, analyses, and
inquiries, as we deemed necessary and appropriate under the circumstances. Among
other things, we have:
1. reviewed the Company's audited financial statements for the fiscal years
ended September 30, 1996 through September 30, 2000, and interim
financial statements for the four-month periods ended January 31, 2001
and January 31, 2000;
2. reviewed the Company's SEC form 10-K for the fiscal years ended September
30, 1996 through September 30, 2000, and SEC form 10-Q for the quarter
ended December 31, 2000;
3. reviewed the Company's financial forecasts prepared by management for
the fiscal years ending September 30, 2001 through 2005;
4. reviewed an STV presentation describing the Company's history,
management profile, corporate organization, principal service areas,
major customers, representative projects, historical and projected
financial performance, and backlog;
5. reviewed the Merger Agreement;
6. reviewed the Commitment Letter between STV and Fleet National Bank,
dated April 27, 2001;
7. reviewed U.S. economy sources, including The Wall Street Journal;
Barron's; The Oregonian; The Dismal Scientist; The Washington Post;
MSNBC; CNNfn; and Reuters Limited;
8. reviewed Stocks, Bonds, Bills & Inflation: 2000 Yearbook, Ibbotson
Associates; Federal Reserve Statistical Release; Mergerstat Review 2000,
Houlihan, Lokey, Howard and Zukin; and
9. reviewed certain publicly available information and financial data on
publicly traded companies similar to STV; and
10. conducted such additional studies, analyses, and investigations as we
deemed appropriate.
Although our thorough discussions with management and review of supporting
documentation give us comfort that our due diligence efforts are appropriate, we
have not conducted a physical examination of all of the Company's properties or
facilities, and we have not obtained or been provided with any independent
formal evaluation of such properties and facilities. We have reviewed the
financial information, financial forecasts and projections, and other internal
data provided to us, as well as other publicly available information, and while
we are unable to verify the accuracy and completeness of such data and
information, we have judged the reasonableness thereof and made certain
adjustments thereto. The Opinion is necessarily based upon market, economic, and
other conditions as they exist on, and can be evaluated as of the date of this
letter.
Management has represented to us that there has been no material adverse
change in the business, financial position, or results of operations of the
Company since January 31, 2001.
Williamette Management Associates
Based on the foregoing, it is our opinion as of the date hereof, that:
1. the consideration to be paid by the Company to the non-ESOP shareholders
for their stock pursuant to the Transaction is not greater than the fair
market value of such shares;
2. the fair market value of the shares of the Company owned by the ESOP
immediately after the consummation of the Transaction is at least equal to
the fair market value of the shares of the Company owned by the ESOP
immediately prior to the consummation of the Transaction; and
3. the terms and conditions of the Transaction, including the debt incurred
by the Company to complete the Transaction, are fair to the ESOP from a
financial point of view.
This Opinion is solely for the use and benefit of the Trustee, and any
summary of or reference to the Opinion or any other reference to Willamette by
the Company in connection with the Transaction will be subject to Willamette's
prior review and written approval. In addition, we consent to a description of
and the inclusion of the text of our written Opinion in any filing required to
be made by the Company with the SEC in connection with the Transaction and in
materials delivered to the Company's stockholders that are a part of such
filings, provided that any such description or inclusion shall be subject to our
prior review and approval, which approval shall not be unreasonably withheld.
If so requested by the Trustee, we will update the Opinion to a date on or
about the effective date of the Transaction; provided, that we will be entitled
to reconsider the conclusion set forth in the initial Opinion based on
additional information becoming available to us between the date of the initial
Opinion and the date of the updated Opinion.
This Opinion is delivered subject to the conditions, scope of engagement,
limitations and understandings set forth in this Opinion and our engagement
letter dated March 2, 2001, and subject to the understanding that the
obligations of Willamette in the Transaction are solely corporate obligations
and no officer, director, employee, agent, shareholder or controlling person of
Willamette shall be subjected to any personal liability whatsoever to any
person, nor will any such claim be asserted by or on behalf of you or your
affiliates.
In accordance with recognized professional ethics, our professional fees for
this service are not contingent upon the opinion expressed herein, and neither
Willamette, nor any of its employees, has a present or intended financial
relationship with or interest in STV.
Very truly yours,
WILLAMETTE MANAGEMENT ASSOCIATES
/s/ Willamette Management Associates
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Willamette Management Associates