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Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including Associated Rights to Purchase Series A
Junior Participating Preferred Stock)
of
MORRISON MANAGEMENT SPECIALISTS, INC.
at
$40.00 NET PER SHARE
by
YORKMONT ONE, INC.,
a wholly owned indirect subsidiary of
COMPASS GROUP PLC
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON FRIDAY, MARCH 30, 2001, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER DATED
AS OF FEBRUARY 6, 2001, AS AMENDED, AMONG COMPASS GROUP PLC, YORKMONT ONE, INC.
AND MORRISON MANAGEMENT SPECIALISTS, INC. (THE "COMPANY"). THE BOARD OF
DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND ADOPTED THE MERGER
AGREEMENT, APPROVED THE ENTRY OF THE COMPANY INTO THE MERGER AGREEMENT AND THE
CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED THEREBY. THE
COMPANY BOARD DETERMINED THAT THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN),
CONSIDERED AS A WHOLE, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
THE SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED
HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES OF COMMON STOCK OF THE COMPANY (INCLUDING ASSOCIATED RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK) THAT WOULD REPRESENT AT LEAST A
MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS ON THE DATE OF
PURCHASE AND (II) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED,
BEFORE THE EXPIRATION DATE OF THE OFFER. THE OFFER IS ALSO SUBJECT TO THE
SATISFACTION OF CERTAIN OTHER CONDITIONS. SEE SECTION 14 -- "CERTAIN CONDITIONS
OF THE OFFER."
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (1) complete and sign the Letter of Transmittal (or
manually signed facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, have such shareholder's signature thereon guaranteed if
required by Instruction 1 to the Letter of Transmittal, mail or deliver the
Letter of Transmittal (or such manually signed facsimile) and any other required
documents to SunTrust Bank (the "Depositary") and deliver the certificates for
such Shares to the Depositary along with the Letter of Transmittal (or such
manually signed facsimile) or, in the case of a book-entry transfer effected
pursuant to the procedures described in Section 2, deliver an Agent's Message
(as defined herein) and any other required documents to the Depositary and
deliver such Shares pursuant to the procedures for book-entry transfer described
in Section 2, in each case prior to the expiration of the Offer, or (2) request
such shareholder's broker, dealer, bank, trust company or other nominee to
effect the transaction for such shareholder. A shareholder having Shares
registered in the name of a broker, dealer, bank, trust company or other nominee
must contact such broker, dealer, bank, trust company or other nominee if such
shareholder desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedures for guaranteed delivery described in
Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery or any
other tender offer materials may be directed to MacKenzie Partners, Inc. (the
"Information Agent") or to Credit Suisse First Boston Corporation at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON LOGO
February 16, 2001
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TABLE OF CONTENTS
PAGE
----
Summary Term Sheet.......................................... 1
Introduction................................................ 5
The Tender Offer............................................ 6
1. Terms of the Offer.................................... 6
2. Procedures for Tendering Shares....................... 8
3. Withdrawal Rights..................................... 11
4. Acceptance for Payment and Payment.................... 11
5. Certain U.S. Federal Income Tax Consequences.......... 12
6. Price Range of the Shares; Dividends on the Shares.... 13
7. Effect of the Offer on the Market for the Shares; NYSE
Listing; Exchange Act Registration;
Margin Regulations................................... 14
8. Certain Information Concerning the Company............ 15
9. Certain Information Concerning Parent and the
Purchaser.............................................. 17
10. Source and Amount of Funds............................ 18
11. Contacts and Transactions with the Company; Background
of the Offer........................................... 18
12. Purpose of the Offer; The Merger Agreement; Plans for
the Company............................................ 19
13. Dividends and Distributions........................... 32
14. Certain Conditions of the Offer....................... 32
15. Certain Legal Matters................................. 34
16. Fees and Expenses..................................... 36
17. Miscellaneous......................................... 36
Schedule I -- Directors and Executive Officers of Parent and
Purchaser................................................. S-1
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SUMMARY TERM SHEET
Yorkmont One, Inc. is offering to purchase all of the outstanding common
stock of Morrison Management Specialists, Inc. (including the associated rights
to purchase Series A Junior Participating Preferred Stock) for $40.00 per share
in cash. The following are some of the questions you, as a shareholder of
Morrison, may have and answers to those questions. We urge you to read carefully
the remainder of this offer to purchase and the letter of transmittal because
the information in this summary is not complete. Additional important
information is contained in the remainder of this offer to purchase and the
letter of transmittal.
WHO IS OFFERING TO BUY MY SHARES?
Our name is Yorkmont One, Inc. We are a Georgia corporation formed for the
purpose of making a tender offer for all of the common stock of Morrison. We are
a wholly owned indirect subsidiary of Compass Group PLC, a public limited
company incorporated under the laws of England and Wales. See "Introduction" and
Section 9 -- "Certain Information Concerning Parent and the Purchaser" of this
offer to purchase.
WHAT SHARES ARE BEING SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of Morrison
(including the associated rights to purchase Series A Junior Participating
Preferred Stock). See "Introduction" and Section 1 -- "Terms of the Offer" of
this offer to purchase.
HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $40.00 per share, net to you, in cash. If you are
the record owner of your shares and you tender your shares to us in the offer,
you will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares on
your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. See "Introduction" and Section 1 -- "Terms of the Offer" of this offer to
purchase.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Compass Group PLC, our parent company, will provide us with sufficient
funds to acquire all tendered shares and any shares to be acquired in the merger
that is expected to follow the successful completion of the offer. The offer is
not conditioned upon any financing arrangements. See Section 10 -- "Source and
Amount of Funds" of this offer to purchase.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender in the offer because:
- the form of payment consists solely of cash,
- the offer is being made for all outstanding shares,
- the offer is not subject to any financing condition, and
- after we complete the offer, we will acquire all remaining shares for the
same cash price in the merger.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 5:00 P.M., New York City time, on March 30,
2001, to tender your shares in the offer. Further, if you cannot deliver
everything that is required in order to make a valid tender by that time, you
may be able to use a guaranteed delivery procedure, which is described later in
this offer to purchase. See Section 1 -- "Terms of the Offer" and Section
2 -- "Procedures for Tendering Shares" of this offer to purchase.
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CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the offer. The
merger agreement provides that we may extend the offer for a period of time we
reasonably believe necessary to cause the conditions to our offer to be
satisfied, if on a scheduled expiration date any of the conditions to our offer
are not satisfied; however, we may not extend the offer beyond April 30, 2001
without the Company's prior written consent.
If all conditions to the offer have been satisfied or waived, we will
accept for payment and pay for all shares that are tendered and not withdrawn at
such time (which shares may not thereafter be withdrawn) and to provide a
"subsequent offering period" for at least three business days, during which time
shareholders whose shares have not been accepted for payment may tender, but not
withdraw, their shares and receive the offer consideration. We are not permitted
under the federal securities laws to provide a subsequent offering period of
more than 20 business days.
See Section 1 -- "Terms of the Offer" of this offer to purchase.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform SunTrust Bank, the depositary for
the offer, of that fact and we will make a public announcement of the extension,
not later than 9:00 a.m., New York City time, on the next business day after the
day on which the offer was scheduled to expire. See Section 1 -- "Terms of the
Offer" of this offer to purchase.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There is no financing condition to the offer; however:
- we are not obligated to purchase any shares which are validly tendered
unless the number of shares validly tendered and not withdrawn before the
expiration date of the offer represents at least a majority of the shares
of Morrison outstanding on a fully diluted basis. We have agreed not to
waive this minimum tender condition without the consent of Morrison;
- we are not obligated to purchase any shares which are validly tendered
if:
- the requisite waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 has not expired or been terminated; or
- there is a material adverse change in Morrison or its business.
The offer is also subject to a number of other conditions. See Section
14 -- "Certain Conditions of the Offer" of this offer to purchase.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal and any other documents
required, to SunTrust Bank, the depositary for the offer, not later than the
time the tender offer expires. If your shares are held in street name, the
shares can be tendered by your nominee through The Depository Trust Company. If
you cannot deliver something that is required to be delivered to the depositary
by the expiration of the offer, you may obtain additional time to do so by
having a broker, a bank or other fiduciary that is a member of the Securities
Transfer Agents Medallion Program or other eligible institution guarantee that
the missing items will be received by the depositary within three New York Stock
Exchange trading days. For the tender to be valid, however, the depositary must
receive the missing items within that three trading day period. See Section
2 -- "Procedures for Tendering Shares" of this offer to purchase.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not agreed to accept your shares for payment by April 16, 2001, you can
withdraw them at any time after such time until we accept
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shares for payment. This right to withdraw will not apply to any subsequent
offering period. See Section 1 -- "Terms of the Offer" and Section
3 -- "Withdrawal Rights" of this offer to purchase.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 1 -- "Terms of the
Offer" and Section 3 -- "Withdrawal Rights" of this offer to purchase.
WHAT DOES THE MORRISON BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to a merger agreement among us, Compass
Group PLC and Morrison. The Morrison Board of Directors unanimously approved and
adopted the merger agreement, approved the entry of Morrison into the merger
agreement and the consummation by Morrison of the transactions contemplated by
the merger agreement. The Morrison Board determined that the offer and the
merger, considered as a whole, are fair to and in the best interests of Morrison
and the shareholders of Morrison, and unanimously recommends that its
shareholders accept the offer and tender their shares in the offer.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE SHARES ARE NOT TENDERED
IN THE OFFER?
If we accept for payment and pay for at least a majority of the outstanding
shares on a fully diluted basis of Morrison, we will promptly take steps to
merge with Morrison. If that merger takes place, it will result in Compass Group
PLC owning all of the shares of Morrison, because the remaining shareholders of
Morrison will receive $40.00 per share in cash (or any higher price per share
that is paid in the offer) for their shares in the merger.
There are no dissenters' rights available in connection with the offer.
However, if the merger takes place, shareholders who have not sold their shares
in the offer and who do not vote in favor of the merger will have dissenters'
rights under Georgia law. See Section 12 -- "Purpose of the Offer; The Merger
Agreement; Plans for the Company -- Dissenters' Rights" of this offer to
purchase.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger takes place, shareholders who do not tender in the offer will
receive the same amount of cash per share that they would have received had they
tendered their shares in the offer, subject to their right to pursue dissenters'
rights under Georgia law. Therefore, if the merger takes place and you do not
perfect your dissenters' rights, the only difference to you between tendering
your shares and not tendering your shares is that you will be paid earlier if
you tender your shares. However, if the merger does not take place, the number
of shareholders and of shares of Morrison that are still in the hands of the
public may be so small that there may no longer be an active public trading
market (or, possibly, any public trading market) for the shares. Also, the
shares may no longer be eligible to be traded on the New York Stock Exchange or
any other securities exchange, and Morrison may cease making filings with the
SEC or otherwise cease being required to comply with the SEC's rules relating to
publicly held companies. See Section 7 -- "Effect of the Offer on the Market for
the Shares; NYSE Listing; Exchange Act Registration; Margin Regulations" and
Section 12 -- "Purpose of the Offer; The Merger Agreement; Plans for the
Company" of this offer to purchase.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On February 5, 2001, the last trading day before Morrison and Compass Group
PLC announced that they had signed the merger agreement, the last sale price of
the shares reported on the New York Stock Exchange was $33.10 per share. On
February 15, 2001, the last trading day before we commenced our tender offer,
the last sale price of the shares was $39.69 per share. We advise you to obtain
a recent quotation for shares of Morrison common stock in deciding whether to
tender your shares. See Section 6 -- "Price Range of the Shares; Dividends on
the Shares" of this offer to purchase.
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TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call MacKenzie Partners, Inc. at (800) 322-2885 (toll free) or
Credit Suisse First Boston Corporation at (800) 646-4543 (toll free). MacKenzie
Partners, Inc. is acting as the information agent and Credit Suisse First Boston
Corporation is acting as the dealer manager for our tender offer. See the back
cover of this offer to purchase.
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To the Holders of Common Stock of
Morrison Management Specialists, Inc.:
INTRODUCTION
Yorkmont One, Inc., a Georgia corporation (the "Purchaser") and wholly
owned indirect subsidiary of Compass Group PLC, a public limited company
incorporated under the laws of England and Wales ("Parent"), hereby offers to
purchase all the outstanding shares of common stock, par value $0.01 per share
(including the associated rights to purchase Series A Junior Participating
Preferred Stock) (collectively, the "Shares"), of Morrison Management
Specialists, Inc., a Georgia corporation (the "Company"), at a price of $40.00
per Share, net to the seller in cash, without interest (the "Offer Price"), upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, together with any amendments or
supplements, collectively constitute the "Offer").
Shareholders whose shares are registered in their own names and who tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as set forth in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer. Shareholders whose Shares are held through
banks or brokers should check with such institutions as to whether they charge
any service fees. The Purchaser will pay all fees and expenses of Credit Suisse
First Boston Corporation, which is acting as Dealer Manager (the "Dealer
Manager"), SunTrust Bank, which is acting as the Depositary (the "Depositary"),
and MacKenzie Partners, Inc., which is acting as the Information Agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
The Offer is being made under the terms of an Agreement and Plan of Merger
dated February 6, 2001, as amended (the "Merger Agreement"), among Parent, the
Purchaser and the Company, under which, following the consummation of the Offer
and the satisfaction or waiver of certain conditions, the Purchaser will be
merged with and into the Company, with the Company surviving the merger as a
wholly-owned indirect subsidiary of Parent (the "Merger"). At the effective time
of the Merger (the "Effective Time") each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent, the
Purchaser or the Company or any subsidiary of Parent or the Company or by
shareholders, if any, who are entitled to and properly exercise dissenters'
rights under Georgia law) will be converted into the right to receive the price
per Share paid pursuant to the Offer in cash, without interest.
The Merger Agreement is more fully described in Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED AND ADOPTED
THE MERGER AGREEMENT, APPROVED THE ENTRY BY THE COMPANY INTO THE MERGER
AGREEMENT, AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED
THEREBY. THE COMPANY'S BOARD DETERMINED THAT THE OFFER AND THE MERGER,
CONSIDERED AS A WHOLE, ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND
THE SHAREHOLDERS OF THE COMPANY; AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF
THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE
FACTORS CONSIDERED BY THE BOARD OF DIRECTORS OF THE COMPANY IN ARRIVING AT ITS
DECISION TO APPROVE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THE MERGER AGREEMENT AND TO RECOMMEND THAT SHAREHOLDERS OF THE COMPANY ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER ARE DESCRIBED IN THE
COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE
14D-9"), WHICH HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") AND IS BEING MAILED TO SHAREHOLDERS OF THE COMPANY CONCURRENTLY
HEREWITH.
Bear, Stearns & Co. Inc. has acted as the Company's financial advisor. The
opinion of Bear, Stearns & Co. Inc., dated February 6, 2001, that, as of such
date, the consideration to be received in the Offer and the Merger by the
holders of Shares was fair, from a financial point of view, to such holders is
set forth in full as an annex to the Schedule 14D-9. Shareholders are urged to,
and should, read the Schedule 14D-9 and such opinion carefully in their
entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES THAT WOULD REPRESENT AT LEAST A MAJORITY OF THE FULLY DILUTED
SHARES (AS DEFINED IN SECTION 14 HEREOF) ON THE DATE OF PURCHASE (THE
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"MINIMUM CONDITION"), AND (2) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), APPLICABLE TO
THE PURCHASE OF SHARES PURSUANT TO THE OFFER OR TO THE MERGER HAVING EXPIRED OR
BEEN TERMINATED. THE OFFER IS ALSO SUBJECT TO THE SATISFACTION OF CERTAIN OTHER
CONDITIONS. SEE SECTION 14 -- "CERTAIN CONDITIONS OF THE OFFER."
Consummation of the Merger is subject to a number of conditions, including
approval by a majority of the outstanding Shares of the Company, including those
Shares purchased pursuant to the Offer. If the Purchaser acquires 90% or more of
all outstanding Shares, the Purchaser will be able to effect the Merger pursuant
to the "short-form" merger provisions of the Georgia Business Corporation Code
(the "GBCC"), without prior notice to, or any action by, any other shareholder
of the Company. In such event, the Purchaser intends to effect the Merger
without prior notice to, or any action by, any other shareholder of the Company.
See Section 12.
The Company has informed the Purchaser that, as of December 31, 2000, there
were: (a) 12,783,834 Shares issued and outstanding; and (b) as of February 6,
2001, there were no more than 2,475,495 Shares reserved for issuance upon the
exercise of outstanding options to purchase Shares from the Company. Based upon
the foregoing and assuming that no Shares are otherwise issued after December
31, 2000, the Minimum Condition will be satisfied if at least 7,629,666 Shares
are validly tendered and not withdrawn prior to the Expiration Date. The actual
number of Shares required to be tendered to satisfy the Minimum Condition will
depend upon the actual number of Fully Diluted Shares on the date that the
Purchaser accepts Shares for payment pursuant to the Offer. If the Minimum
Condition is satisfied, and the Purchaser accepts for payment Shares tendered
pursuant to the Offer, the Purchaser will be able to elect a majority of the
members of the Company's Board of Directors and to effect the Merger without the
affirmative vote of any other shareholder of the Company. See Section 12.
Certain U.S. federal income tax consequences of the sale of Shares pursuant
to the Offer and the conversion of Shares pursuant to the Merger are described
in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not withdrawn in accordance with Section 3. The term
"Expiration Date" means 5:00 P.M., New York City time, on March 30, 2001, unless
the Purchaser extends the period of time during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date on
which the Offer, as so extended by the Purchaser, will expire.
If by 5:00 P.M., New York City time, on March 30, 2001 (or any date or time
then set as the Expiration Date), any or all of the conditions to the Offer have
not been satisfied or waived, the Purchaser, subject to the terms of the Merger
Agreement and the applicable rules and regulations of the Commission, reserves
the right (but shall not be obligated) (a) to terminate the Offer and not accept
for payment or pay for any Shares and return all tendered Shares to tendering
shareholders, (b) except as set forth below with respect to the Minimum
Condition, to waive all the unsatisfied conditions and accept for payment and
pay for all Shares validly tendered prior to the Expiration Date and not
theretofore validly withdrawn, (c) as set forth below, to extend the Offer and,
subject to the right of shareholders to withdraw Shares until the Expiration
Date, retain the Shares that have been tendered during the period or periods for
which the Offer is extended, or (d) except as set forth below, to amend the
Offer.
Subject to the terms and conditions set forth herein and in the Merger
Agreement and the applicable rules and regulations of the Commission, the
Purchaser expressly reserves the right (but shall not be obligated), at any time
and from time to time, to waive any condition to the Offer or modify the terms
of the Offer, by giving oral or written notice of such waiver or modification to
the Depositary, except that, without
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the prior written consent of the Company, the Purchaser shall not (i) reduce the
number of Shares subject to the Offer, (ii) reduce the price per Share to be
paid pursuant to the Offer, (iii) waive the Minimum Condition or modify or add
to the conditions of the Offer in any manner adverse to the holders of Shares,
or (iv) change the form of consideration payable in the Offer. If all of the
conditions to the Offer are not satisfied on the Expiration Date then the
Purchaser may extend the Offer for one or more periods of time that the
Purchaser reasonably believes are necessary to cause the conditions of the Offer
to be satisfied from time to time until such conditions are satisfied or waived;
provided that the Purchaser may not extend the Offer beyond April 30, 2001
without the prior written consent of the Company. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, REGARDLESS OF ANY
EXTENSION OF OR AMENDMENT TO THE OFFER OR ANY DELAY IN PAYING FOR SUCH SHARES.
Any extension, waiver, amendment or termination will be followed as
promptly as practicable by a public announcement of that action. An announcement
in the case of an extension will be made no later than 9:00 A.M., New York City
time, on the next business day after the previously scheduled Expiration Date,
in accordance with the public announcement requirements of Rule 14e-1(d) under
the Exchange Act. Without limiting the manner in which the Purchaser may choose
to make any public announcement, subject to applicable law (including Rules
14d-4(d) and 14d-6(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which require that material changes be promptly disseminated to
holders of Shares), we will have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a
release to the Dow Jones News Service. As used in this Offer to Purchase, the
term "Business Day" has the meaning set forth in Rule 14d-1 under the Exchange
Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares or is unable to pay for Shares
pursuant to the Offer for any reason, then, without prejudice to the Purchaser's
rights under the Offer, the Depositary may retain tendered Shares on behalf of
the Purchaser, and such Shares may not be withdrawn except to the extent
tendering shareholders are entitled to withdrawal rights as described under
Section 3. However, the ability of the Purchaser to delay the payment for Shares
that the Purchaser has accepted is limited by Rule 14e-1(c) under the Exchange
Act, which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of shareholders promptly after termination
or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of such offer or information concerning
such offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to shareholders.
Rule 14d-11 under the Exchange Act permits the Purchaser, subject to
certain conditions, to provide a subsequent offering period of from three
business days to 20 business days in length (a "Subsequent Offering Period")
following the expiration of the Offer on the Expiration Date and acceptance for
payment of the Shares tendered in the Offer. A Subsequent Offering Period is an
additional period of time, following the expiration of the Offer and the
purchase of Shares in the Offer, during which shareholders may tender, but not
withdraw, Shares not tendered in the Offer. A Subsequent Offering Period is not
an extension of the Offer, which already will have been completed.
THE PURCHASER INTENDS TO INCLUDE A SUBSEQUENT OFFERING PERIOD OF NO LESS
THAN THREE BUSINESS DAYS IN THE EVENT THAT ALL OF THE CONDITIONS TO THE OFFER
HAVE BEEN SATISFIED OR WAIVED AS OF THE EXPIRATION DATE. PURSUANT TO RULE 14D-7
UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS APPLY TO SHARES TENDERED DURING A
SUBSEQUENT OFFERING PERIOD AND NO WITHDRAWAL RIGHTS APPLY DURING THE SUBSEQUENT
OFFERING PERIOD WITH RESPECT TO SHARES TENDERED IN THE OFFER AND ACCEPTED FOR
PAYMENT. THE SAME CONSIDERATION WILL BE PAID TO SHAREHOLDERS TENDERING SHARES IN
THE OFFER OR IN A SUBSEQUENT OFFERING PERIOD.
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The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares, and will be
furnished to brokers, dealers, banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the shareholder lists, or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a shareholder to validly tender Shares pursuant to the
Offer, (a) the certificates for tendered Shares, together with a Letter of
Transmittal (or manually signed facsimile thereof), properly completed and duly
executed, any required signature guarantees and any other required documents,
must be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date; (b) in the case of
a transfer effected pursuant to the book-entry transfer procedures described
under "Book-Entry Transfer", either a Letter of Transmittal (or manually signed
facsimile thereof), properly completed and duly executed, and any required
signature guarantees, or an Agent's Message (as defined below), and any other
required documents, must be received by the Depositary at one of such addresses,
such Shares must be delivered pursuant to the book-entry transfer procedures
described below and a Book-Entry Confirmation (as defined below) must be
received by the Depositary, in each case prior to the Expiration Date (if your
shares are held through the Company's Dividend Reinvestment Plan, you must
ensure that the Dividend Reinvestment Plan box of the Letter of Transmittal that
is delivered to the Depositary is properly completed); or (c) the tendering
shareholder must comply with the guaranteed delivery procedures described below
under "Guaranteed Delivery" prior to the Expiration Date.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering shareholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY
(AS DEFINED BELOW), IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER.
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant of the
Book-Entry Transfer Facility's system may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. Although delivery of Shares may be made through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, also must be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase prior to the Expiration Date. The confirmation of a book-entry
transfer of Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above is referred to herein as a "Book-Entry
Confirmation". DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
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Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (a) the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section 2, includes any participant
in the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) of Shares tendered and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (b) such Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (such participant, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not tendered or not accepted for payment
are to be returned to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed. See
Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the book-entry transfer procedures cannot be completed on a timely
basis or time will not permit all required documents to reach the Depositary
prior to the Expiration Date, such shareholder's tender may be effected if all
the following conditions are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary at one of its addresses set forth on the back cover of
this Offer to Purchase prior to the Expiration Date; and
(c) either (i) the certificates for tendered Shares together with a
Letter of Transmittal (or manually signed facsimile thereof), properly
completed and duly executed, and any required signature guarantees, and any
other required documents are received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase within
three trading days after the date of execution of such Notice of Guaranteed
Delivery, or (ii) in the case of a book-entry transfer effected pursuant to
the book-entry transfer procedures described above under "Book-Entry
Transfer", either a Letter of Transmittal (or manually signed facsimile
thereof), properly completed and duly executed, and any required signature
guarantees, or an Agent's Message, and any other required documents, is
received by the Depositary at one of such addresses, such Shares are
delivered pursuant to the book-entry transfer procedures above and a
Book-Entry Confirmation is received by the Depositary, in each case within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "Trading Day" is any day on which the New York Stock Exchange,
Inc. (the "NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Dividend Reinvestment Plan. The participants in the Company's Dividend
Reinvestment Plan will receive all documents furnished to shareholders generally
in connection with the Offer. A shareholder participating in the Dividend
Reinvestment Plan who wishes to tender Shares held in such participant's account
may use the Letter of Transmittal to instruct the plan administrator regarding
the Offer by completing the box entitled "Dividend Reinvestment Plan Shares."
Each participant may direct that all, some or none of the Shares credited to
such participant's account be tendered. Any Dividend Reinvestment Plan Shares
tendered but not purchased will be returned to the participant's Dividend
Reinvestment Plan account. If a participant tenders all of his or her Shares
held in a Dividend Reinvestment Plan account and all such Shares are purchased
by the Purchaser pursuant to the Offer, such tender will be deemed to be an
authorization and written notice to the plan administrator to terminate such
shareholder's participation in the Dividend
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Reinvestment Plan subject to such shareholder's right to recommence
participation in accordance with the terms of the Dividend Reinvestment Plan.
Other Requirements. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, (b) a Letter of
Transmittal (or manually signed facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal),
and (c) any other documents required by the Letter of Transmittal. Accordingly,
tendering shareholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OR
AMENDMENT OF THE OFFER OR ANY DELAY IN PAYING FOR SUCH SHARES.
Appointment. By executing a Letter of Transmittal (or manually signed
facsimile thereof), (or, in the case of a book-entry transfer, by delivery of an
Agent's Message, in lieu of a Letter of Transmittal), a tendering shareholder
will irrevocably appoint designees of the Purchaser as such shareholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after February 16, 2001. All such proxies will be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such shareholder as provided herein. Upon the effectiveness
of such appointment, all prior powers of attorney, proxies and consents given by
such shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
the Purchaser must be able to exercise full voting, consent and other rights
with respect to such Shares and other securities or rights, including voting at
any meeting of shareholders immediately upon the Purchaser's acceptance for
payment of such Shares.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser, be
unlawful. The Purchaser also reserves the absolute right to waive any defect or
irregularity in the tender of any Shares of any particular shareholder whether
or not similar defects or irregularities are waived in the case of other
shareholders. No tender of Shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of the Purchaser, Parent, the Company, the Depositary, the Information Agent,
the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto and any other related documents thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless the shareholder is exempt, provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such shareholder is not subject to backup
withholding. If a shareholder does not provide such shareholder's correct TIN or
fails to provide the certifications described above, the Internal Revenue
Service (the "IRS") may impose a penalty on such shareholder and payment of cash
to such shareholder pursuant to the Offer may be subject to backup
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withholding of 31% by the Depositary. All shareholders surrendering Shares
pursuant to the Offer should complete and sign the main signature form and the
Substitute Form W-9 included as part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Purchaser and the Depositary). Certain shareholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. Noncorporate foreign shareholders should complete and
sign the main signature form and a Form W-8BEN, Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after April 16, 2001.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person having tendered the Shares to be withdrawn, the number of
Shares to be withdrawn and the name of the registered holder of the Shares to be
withdrawn, if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution, any and all
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the book-entry transfer
procedures described in Section 2, any notice of withdrawal must also specify
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with the Book-Entry
Transfer Facility's procedures. If you are withdrawing Shares held through the
Company's Dividend Reinvestment Plan, you must specify that on your notice of
withdrawal. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Company, the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
No withdrawal rights will apply to Shares tendered during the Subsequent
Offering Period and no withdrawal rights apply during the Subsequent Offering
Period with respect to Shares tendered in the Offer and accepted for payment.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn
promptly after the Expiration Date. The Purchaser, subject to the Merger
Agreement, expressly reserves the right, in its sole discretion, to delay
acceptance for payment of, or payment for, Shares in order to comply in whole or
in part with any applicable law, including, without limitation, the HSR Act. Any
such delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act (relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer).
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In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a)(1) the
certificates for such Shares, together with a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, and
any required signature guarantees, or (2) in the case of a transfer effected
pursuant to the book-entry transfer procedures described in Section 2, a
Book-Entry Confirmation and either a Letter of Transmittal (or manually signed
facsimile thereof), properly completed and duly executed, and any required
signature guarantees, or an Agent's Message, and (b) any other required
documents. Accordingly, tendering shareholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary.
The per Share consideration paid to any shareholder pursuant to the Offer
will be the highest per Share consideration paid to any other shareholder
pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as an agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting that payment to tendering shareholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF OR AMENDMENT
TO THE OFFER OR ANY DELAY IN PAYING FOR SUCH SHARES.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer), and the
terms of the Merger Agreement (requiring that the Purchaser pay for Shares
accepted for payment as soon as practicable after the Expiration Date), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to do so as described in Section 3.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, the certificates for such Shares
will be returned (and, if certificates are submitted for more Shares than are
tendered, new certificates for the Shares not tendered will be sent) in each
case without expense to the tendering shareholder (or, in the case of Shares
delivered by book-entry transfer of such Shares into the Depositary's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described in Section 2, such Shares will be credited to an account maintained at
the Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction to the recipient shareholder for U.S. federal income tax purposes
under the Internal Revenue Code of 1986, as amended (the "Code"), and may also
be a taxable transaction under applicable state, local or foreign income or
other tax laws. Generally, for U.S. federal income tax purposes, a tendering
shareholder will recognize gain or loss equal to the difference between (1) the
amount of cash received by the shareholder pursuant to the Offer or Merger, and
(2) the aggregate adjusted tax basis in the Shares tendered by the shareholder
and purchased pursuant to the Offer or converted into cash in the Merger, as the
case may be. Gain or loss will be calculated separately for each block of Shares
tendered and purchased pursuant to the Offer or converted into cash in the
Merger, as the case may be.
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If Shares are held by a shareholder that receives cash pursuant to the
Offer or the Merger as capital assets, gain or loss recognized by such
shareholder will be capital gain or loss, which will be long-term capital gain
or loss if such shareholder's holding period for the Shares exceeds one year. In
the case of a tendering noncorporate shareholder, long-term capital gains will
be eligible for a maximum U.S. federal income tax rate of 20%. In addition,
there are limits on the deductibility of capital losses.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals) that tenders Shares or
has Shares converted in the Merger may be subject to 31% backup withholding
unless the shareholder (1) provides its TIN and certifies that such number is
correct (or properly certifies that it is awaiting a TIN) and certifies as to no
loss of exemption from backup withholding, and (2) otherwise complies with the
applicable requirements of the backup withholding rules. A shareholder that does
not furnish a required TIN or that does not otherwise establish a basis for an
exemption from backup withholding may be subject to a penalty imposed by the
IRS. See "Backup Withholding" under Section 2. Each shareholder should complete
and sign the Substitute Form W-9 included as part of the Letter of Transmittal
so as to provide the information and certification necessary to avoid backup
withholding.
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the U.S. federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the IRS.
If backup withholding results in an overpayment of tax, a refund can be obtained
by the shareholder by filing a U.S. federal income tax return.
The foregoing discussion may not be applicable with respect to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation or with respect to holders of Shares who are subject to special tax
treatment under the Code -- such as non-U.S. persons, life insurance companies,
tax-exempt organizations and financial institutions -- and may not apply to a
holder of Shares in light of individual circumstances, such as holding Shares as
a hedge or as part of a hedging, straddle, conversion or other risk-reduction
transaction. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND
EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER
AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are listed on the NYSE under the symbol "MHI". The following
table sets forth, for each of the periods indicated, the high and low sales
prices per Share on the NYSE Composite Transactions Tape and the amount of cash
dividends paid per Share.
COMMON STOCK
HIGH LOW CASH DIVIDENDS
------- ------- --------------
Fiscal Year Ended May 31, 1999:
First Quarter............................................. $18.068 $15.341 $0.036
Second Quarter............................................ 16.818 14.545 0.036
Third Quarter............................................. 18.295 16.477 0.036
Fourth Quarter............................................ 18.125 15.909 0.036
Fiscal Year Ended May 31, 2000:
First Quarter............................................. 23.409 16.875 0.036
Second Quarter............................................ 22.046 16.634 0.036
Third Quarter............................................. 22.841 17.273 0.036
Fourth Quarter............................................ 28.000 19.205 0.036
Fiscal Year Ending May 31, 2001:
First Quarter............................................. 30.750 24.063 0.040
Second Quarter............................................ 34.500 26.500 0.040
Third Quarter (through February 15, 2001)................. 39.740 27.550 --
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On February 5, 2001, the last full trading day before the public
announcement of the execution of the Merger Agreement, the last reported sales
price of the Shares on the NYSE Composite Transactions Tape was $33.10 per
Share. On February 15, 2001, the last full trading day before commencement of
the Offer, the last reported sales price of the Shares on the NYSE Composite
Transactions Tape was $39.69 per Share. Shareholders are urged to obtain current
market quotations for the Shares.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NYSE LISTING; EXCHANGE ACT
REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
NYSE Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements for continued listing
on the NYSE. According to the NYSE's published guidelines, the NYSE would
consider delisting the Shares if, among other things, the number of publicly
held Shares falls below 600,000, the total number of holders of Shares falls
below 400 (or below 1,200 if the average monthly trading volume is below 100,000
Shares for the most recent 12 months) or the Company's average total global
market capitalization over a consecutive 30-trading day period is less than
$15,000,000. Shares held by officers or directors of the Company or their
immediate families, or by other concentrated holdings of more than 10% or more
of the Shares, ordinarily will not be considered as being publicly held for this
purpose. According to the Company, as of December 31, 2000 there were 12,783,834
Shares outstanding. If, as a result of the purchase of Shares pursuant to the
Offer or otherwise, the Shares no longer meet the requirements of the NYSE for
continued listing and the Shares are no longer listed, the market for Shares
could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges. The extent
of the public market for the Shares and the availability of such quotations
would, however, depend upon the number of holders of Shares remaining at such
time, the interests in maintaining a market in Shares on the part of securities
firms, the possible termination of registration of the Shares under the Exchange
Act as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would reduce the information
required to be furnished by the Company to its shareholders and to the
Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit-recovery provisions of
Section 16(b) of the Exchange Act and the requirement of furnishing a proxy
statement pursuant to Section 14(a) or 14(c) of the Exchange Act in connection
with shareholders' meetings and the related requirement of furnishing an annual
report to shareholders. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Purchaser intends to seek
to cause the Company to apply for termination of registration of the Shares
under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers.
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8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Georgia corporation with its principal offices at 1955
Lake Park Drive, Suite 400, Smyrna, GA 30080, telephone number (770) 437-3300.
According to the Company's Annual Report for the fiscal year ended May 31, 2000,
the Company's business is the providing of food, nutrition and dining services
to the healthcare and senior living industries.
Certain Company Financial Information. Set forth below is certain selected
financial information with respect to the Company and its subsidiaries excerpted
from the information contained in the Company's Annual Report on Form 10-K for
the fiscal year ended May 31, 2000 and from the Company's Quarterly Report on
Form 10-Q for the quarter ended November 30, 2000. More comprehensive financial
information is included in those reports and other documents filed by the
Company with the Commission, and the following summary is qualified in its
entirety by reference to such reports, other documents and all the financial
information (including any related notes) contained therein. Such reports and
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information".
MORRISON MANAGEMENT SPECIALISTS, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
FOR THE FISCAL YEAR FOR THE SIX MONTHS
ENDED MAY 31, ENDED NOVEMBER 30,
------------------------------ -------------------
1998 1999 2000 1999 2000
-------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
Consolidated Statements of Income Data:
Revenues.................................. $250,371 $324,968 $441,074 $195,168 $263,365
Income before provision for income
taxes.................................. 19,065 22,197 23,573 11,700 14,813
Provision for federal and state income
taxes.................................. 7,513 8,657 9,311 4,607 5,851
Net income................................ 11,552 13,540 14,262 7,093 8,962
Earnings per share -- Basic............... 0.88 1.04 1.10 0.54 0.71
Earnings per share -- Diluted............. 0.86 1.02 1.07 0.53 0.68
Weighted average common shares -- Basic... 13,132 13,071 12,918 13,061 12,678
Net effect of dilutive stock options...... 279 244 427 390 584
Weighted average common
shares -- Diluted...................... 13,411 13,315 13,345 13,451 13,262
FOR THE FISCAL YEAR
ENDED MAY 31, FOR THE SIX MONTHS
------------------- ENDED
1999 2000 NOVEMBER 30, 2000
-------- -------- ------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
Consolidated Balance Sheets Data:
Total assets........................................... $102,927 $120,460 $135,742
Long-term debt, less current portion................... 49,305 54,865 63,275
Shareholders' equity................................... 14,563 15,085 21,014
Working capital........................................ 15,670 16,870 --
Current ratio.......................................... 1.6:1 1.5:1 --
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Certain Company Projections. During the course of discussions between
representatives of Parent and the Company, the Company provided Parent or its
representatives with certain non-public business and financial information about
the Company. This information included the following projections of managed
volume (the total cost of operating all client accounts as if performed on a
profit and loss basis by the Company), revenues, net income and earnings per
share for the Company for the 2001 and 2002 fiscal years:
2001 2002
---------- ------------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
Managed Volume.............................................. $882,200 $1,001,700
Revenues.................................................... 544,900 631,300
Net Income.................................................. 19,400 23,400
Diluted Earnings Per Share.................................. 1.45 1.74
The Company has advised the Purchaser and Parent that it does not as a
matter of course make public any projections as to future performance or
earnings, and the projections set forth above are included in this Offer to
Purchase only because this information was provided to Parent. The projections
were not prepared with a view to public disclosure or compliance with the
published guidelines of the Commission or the guidelines established by the
American Institute of Certified Public Accountants regarding projections or
forecasts. The projections do not purport to present operations in accordance
with generally accepted accounting principles, and the Company's independent
auditors have not examined or compiled the projections and accordingly assume no
responsibility for them. The Company has advised the Purchaser and Parent that
its internal financial forecasts (upon which the projections provided to Parent
and the Purchaser were based in part) are, in general, prepared solely for
internal use and capital budgeting and other management decisions and are
subjective in many respects and thus susceptible to interpretations and periodic
revision based on actual experience and business developments. The projections
also reflect numerous assumptions made by management of the Company, with
respect to industry performance, general business, economic, market and
financial conditions and other matters, including effective tax rates consistent
with historical levels for the Company and expected debt payments, all of which
are difficult to predict, many of which are beyond the Company's control, and
none of which were subject to approval by Parent or the Purchaser. Accordingly,
there can be no assurance that the assumptions made in preparing the projections
will prove accurate. It is expected that there will be differences between
actual and projected results, and actual results may be materially greater or
less than those contained in the projections. The inclusion of the projections
herein should not be regarded as an indication that any of Parent, the
Purchaser, the Company or their respective affiliates or representatives
considered or consider the projections to be a reliable prediction of future
events, and the projections should not be relied upon as such. None of Parent,
the Purchaser, the Company or any of their respective affiliates or
representatives has made or makes any representation to any person regarding the
ultimate performance of the Company compared to the information contained in the
projections, and none of them intends to update or otherwise revise the
projections to reflect circumstances existing after the date when made or to
reflect the occurrence of future events even in the event that any or all of the
assumptions underlying the projections are shown to be in error.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Certain information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options and other matters, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in the Company's proxy statements distributed to the
Company's shareholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center,
Suite 1400, 500 West Madison Street, Chicago, IL 60661. Copies of such
information should be obtainable, by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, DC 20549. The Commission also maintains a Web site on
the Internet at http://www.sec.gov/ that contains reports, proxy
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and information statements and other information regarding registrants that file
electronically with the Commission. Such information should also be available
for inspection at the library of the NYSE, 20 Broad Street, New York, NY 10005.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although Parent and the Purchaser do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER
Parent is a public limited company organized under the laws of England and
Wales and is a world leading foodservice company. Parent is listed on the London
Stock Exchange and is a member of the FTSE 100. Parent's foodservice operations
employ approximately 280,000 people worldwide and include contract catering and
concessions. Parent is organized geographically into the UK, Continental Europe
and the rest of the world and North America and also by market sector within
each of these divisions. The market sectors are: Business and Industry,
Education, Healthcare, Vending Services, Defense and Remote Site, Motorway and
Roadside Services, Retail and Leisure, Correctional, Travel, and Sport and
Events. Parent also owns the Forte Hotel Group. On October 16, 2000, an intent
to dispose of this hotel business was announced, and an auction process is
underway.
The Purchaser, a Georgia corporation and wholly owned indirect subsidiary
of Parent, was organized to acquire the Company and has not conducted any
unrelated activities since its organization. All outstanding Shares of capital
stock of the Purchaser are owned by Compass Holdings, Inc., a Delaware
corporation ("CHI") and wholly owned direct subsidiary of Compass Group USA
Investments LLP, a Delaware limited liability partnership ("CGUI"). CGUI is
wholly owned by Compass Group Holdings PLC, a public limited company
incorporated under the laws of England and Wales ("Group Holdings"), and Compass
Overseas Holdings Ltd, a limited company incorporated under the laws of England
and Wales ("Overseas Holdings"). Both Group Holdings and Overseas Holdings are
wholly owned direct subsidiaries of Hospitality Holdings Ltd, a limited company
incorporated under the laws of England and Wales ("Hospitality Holdings") and a
wholly owned direct subsidiary of Parent.
The principal executive offices of Parent, Hospitality Holdings, Group
Holdings and Overseas Holdings are located at Cowley House, Guildford Street,
Chertsey, Surrey, England KT16 9BA, telephone number 011-44-1932-573-000. The
principal executive offices of the Purchaser, CGUI and CHI are located at 2400
Yorkmont Road, Charlotte, North Carolina 28217, telephone number (704) 329-4000.
CGUI either directly or through CHI owns substantially all of Parent's indirect
operating subsidiaries in the United States.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.
Except as described in this Offer to Purchase, none of the Purchaser,
Parent, Hospitality Holdings, Group Holdings, Overseas Holdings, CGUI or CHI
(together, the "Corporate Entities") or, to the best knowledge of the Purchaser
and Parent, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of any of the Corporate Entities or any of the persons
so listed, beneficially owns any equity security of the Company, and none of the
Corporate Entities or, to the best knowledge of the Purchaser and Parent, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
Except as described in this Offer to Purchase or the Schedule TO (as
defined below), (a) there have not been any contacts, transactions or
negotiations between the Corporate Entities, any of their respective
subsidiaries or, to the best knowledge of the Purchaser and Parent, any of the
persons listed in Schedule I, on
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the one hand, and the Company or any of its directors, officers or affiliates,
on the other hand, that are required to be disclosed pursuant to the rules and
regulations of the Commission, and (b) none of the Corporate Entities or, to the
best knowledge of the Purchaser and Parent, any of the persons listed in
Schedule I has any contract, arrangement, understanding or relationship with any
person with respect to any securities of the Company.
Because the only consideration in the Offer and Merger is cash and the
Offer covers all outstanding Shares, and in view of the absence of a financing
condition and the amount of consideration payable in relation to the committed
credit facility and other financial capacity of Parent and its affiliates, the
Purchaser believes the financial condition of Parent and its affiliates is not
material to a decision by a holder of Shares whether to sell, tender or hold
Shares pursuant to the Offer.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
all outstanding Shares pursuant to the Offer and the Merger will be
approximately $511,000,000 plus reasonable and customary fees and expenses.
Additional funds of approximately $52,000,000 will be required to fund all
payments with respect to all outstanding options required pursuant to the Merger
Agreement. The Purchaser will obtain necessary funds from capital contributions
or intercompany advances from Parent, either directly or through one or more
wholly owned subsidiaries of Parent. Parent will obtain such funds from
internally generated funds including its banking facilities. The Offer is not
conditioned on any financing arrangements.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
Parent has historically followed a strategy for long term growth with a
focus on client and customer satisfaction and leadership in the market. In order
to implement that strategy, Parent has acquired businesses in certain specific
industry sectors of the United States foodservice market. The acquisition of the
Company enhances the Parent's business in the healthcare and senior living
industries.
Michael J. Bailey is Chief Executive of Parent and formerly was Chief
Executive Officer, North America Division of Parent. Mr. Bailey and Glenn A.
Davenport, President and Chief Executive Officer of the Company, have known each
other for more than 10 years and have periodically talked at industry functions.
These conversions were nonspecific and dealt with general industry trends.
During January and February 2000, representatives of Parent and the Company
met and had various telephone conversations regarding potential business
opportunities involving the Parent and the Company, including a possible
acquisition of the Company by Parent and an acquisition by the Company of
certain assets of Parent. However, Parent and the Company were not able to reach
agreement on a mutually acceptable transaction.
During September and October 2000, management of Parent renewed its
contacts with the Company's executives to discuss a potential transaction.
In late October 2000, Mr. Davenport called Mr. Bailey and suggested that
they meet to further discuss various strategic alternatives available to the
Company and Parent.
On November 20, 2000, Mr. Bailey and Gary R. Green, the present Chief
Executive Officer, North America Division of Parent, met with Mr. Davenport and
K. Wyatt Engwall, the Chief Financial Officer of the Company, to further discuss
potential business opportunities involving the Company and Parent. No decisions
were made at that meeting although Mr. Bailey and Mr. Green were to consider a
possible acquisition of the Company. After further internal review of the
situation, on November 28, 2000, Mr. Green provided the Company with his
estimate of a price range for the Company's shares.
Thereafter, the parties decided to explore a possible transaction in more
depth and on December 4, 2000, Parent and the Company executed a Confidentiality
Agreement (the "Confidentiality Agreement").
During December and early January, representatives of the Company and
Parent had various discussions regarding a possible transaction and the scope of
due diligence to be performed on behalf of Parent.
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Beginning January 15, 2001, representatives of Parent and its advisors met
with members of the Company's management to conduct a review of the Company's
business and operations. Also, Parent began legal, business and financial due
diligence with respect to the Company, which continued for the balance of the
month.
On January 17, 2001, Parent's legal advisors provided the Company with a
draft of a proposed acquisition agreement. On January 23, 2001, Parent's and the
Company's respective legal advisors began negotiating the terms of an agreement.
Parent, the Company, and their respective advisors continued their
negotiations until February 5, 2001, when the parties reached an agreement.
Parent's Board of Directors had periodically received information on Mr.
Bailey's contacts with the Company and had explored a possible transaction in
depth at a regular meeting on January 23, 2001. Finally, on February 2, 2001,
Parent's Board of Directors formally authorized the Offer, the Merger, the
Merger Agreement and the other transactions contemplated thereby, subject to the
satisfactory negotiation of the Merger Agreement. On Monday afternoon, February
5, 2001, the Company's Board of Directors approved the Offer, the Merger, the
Merger Agreement and the other transactions contemplated thereby.
On Tuesday morning, February 6, 2001, Parent, the Purchaser, and the
Company executed the Merger Agreement and Parent and the Company issued a joint
press release in the United States and in London announcing the execution of the
Merger Agreement.
On February 15, 2001, Parent, the Purchaser and the Company executed an
amendment to the Merger Agreement to clarify certain matters included in the
Merger Agreement.
On February 16, 2001, in accordance with the Merger Agreement, the
Purchaser commenced the Offer.
During the Offer Period Parent and the Purchaser intend to have ongoing
contacts and negotiations with the Company and its directors, officers and
shareholders.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; PLANS FOR THE COMPANY
Purpose
The purpose of the Offer is to enable Parent to acquire control of the
Company and to acquire the outstanding Shares. The Offer, as the first step in
the acquisition of the Company, is intended to facilitate the acquisition of all
the outstanding Shares. The purpose of the Merger is to acquire all outstanding
Shares not tendered and purchased pursuant to the Offer or otherwise.
The Merger Agreement
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions described below under "Conditions to the Merger", the Purchaser
will be merged with and into the Company, with the Company being the surviving
corporation, and each issued Share (other than Shares owned by Parent, the
Purchaser or the Company or a subsidiary of Parent, the Purchaser or the Company
or by shareholders, if any, who are entitled to and who properly exercise
dissenters' rights under Georgia law) will be converted into the right to
receive the price per Share paid pursuant to the Offer in cash, without
interest.
Vote Required to Approve Merger. In order to effect the Merger, the GBCC
and the Articles of Incorporation of the Company require the holders of a
majority of the Shares to approve the Merger Agreement. Because the Board of
Directors of the Company unanimously approved and adopted the Merger Agreement
and approved the terms of the Offer and the Merger, unless the Merger is
consummated pursuant to the short form merger provisions under the GBCC as
described below, the only remaining required corporate action of the Company is
the approval of the Merger Agreement by the affirmative vote of the holders of a
majority of the outstanding Shares. If the Parent acquires, through the Offer or
otherwise, a majority of the outstanding Shares, it would have sufficient voting
power to effect the Merger without the vote of any other shareholder of the
Company.
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Under the terms of the Merger Agreement, the Company has agreed to duly
call and hold a meeting of shareholders for the purpose of obtaining the
shareholder approval of the Merger Agreement. All Shares owned by the Purchaser
or any other subsidiary of Parent will be voted in favor of approval of the
Merger Agreement. The meeting of shareholders shall be held as soon as
practicable following the purchase of Shares pursuant to the Offer.
The GBCC also provides that, if a parent company owns at least 90% of the
outstanding shares of each class of stock of a subsidiary, the parent company
may merge that subsidiary into the parent company, or the parent company may
merge itself into that subsidiary, pursuant to the "short-form" merger
procedures without prior notice to, or the approval of, the other shareholders
of the subsidiary. In order to consummate the Merger pursuant to these
provisions of the GBCC, the Purchaser would have to own at least 90% of the
outstanding Shares. Accordingly, if, as a result of the Offer or otherwise, the
Purchaser acquires or controls at least 90% of the outstanding Shares, the
Purchaser intends to effect the Merger without prior notice to, or any action
by, any other shareholder of the Company pursuant to the "short-form" merger
procedures.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver of certain conditions, including the following: (a)
holders of a majority of the Shares shall have approved the Merger (the "Company
Shareholder Approval"); (b)no temporary restraining order, preliminary or
permanent injunction or other order or decree issued by any court of competent
jurisdiction or other legal restraint or prohibition (collectively, "Legal
Restraints") that has the effect of preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall have used
commercially reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as practicable any injunction or other
order that may be entered; and (c) the Purchaser shall have previously accepted
for payment and paid for the Shares validly tendered pursuant to the Offer.
Termination of the Merger Agreement. The Merger Agreement may be
terminated at any time prior to the effective time of the Merger (the "Effective
Time"), whether before or after adoption of the Merger Agreement by the
shareholders of the Company:
(a) by mutual written consent of Parent, the Purchaser and the
Company;
(b) by either Parent or the Company:
(i) if the Purchaser shall not have accepted for payment any Shares
pursuant to the Offer prior to April 30, 2001; provided that this right
to terminate the Merger Agreement is not available to any party whose
breach of the Merger Agreement has been a principal reason the Offer has
not been consummated by such date; or
(ii) if any domestic or foreign government or any court,
administrative agency or commission or other governmental or regulatory
authority or agency (a "Governmental Entity") shall have issued an
order, injunction or other decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for the Shares pursuant to the
Offer or the Merger and such order, injunction, decree or ruling or
other action shall have become final and nonappealable.
(c) by Parent if the Board of Directors of the Company or any
committee thereof shall have (A) withdrawn or modified its recommendation
of the Merger Agreement, the Offer or the Merger or (B) failed to confirm
its recommendation to the Company's shareholders that they accept the Offer
and give the Company Shareholder Approval within 10 business days after a
written request by Parent that it do so if such request is made following
the making of a Takeover Proposal (as defined below under "Takeover
Proposals"); provided that Parent may not make more than one such request
in respect of a Takeover Proposal unless such proposal has been materially
modified;
(d) prior to the Specified Date (as defined below under "Takeover
Proposals") by Parent (i) if the Company shall have breached any of its
representations, warranties or covenants contained in the Merger Agreement,
which breach would give rise to the failure of a condition set forth in
paragraph (d) or (e) of
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Section 14 hereof, and which breach has not been or is incapable of being
cured by the Company within 10 business days after its receipt of written
notice thereof from Parent, or (ii) if any suit, action or proceeding set
forth in paragraph (a) of Section 14 hereof shall have prevailed and become
final and nonappealable;
(e) prior to the Specified Date by the Company if any of Parent's
representations and warranties contained in the Merger Agreement shall not
be true and correct, except for such failures to be true and correct that
(without giving effect to any limitation as to "materiality" set forth
therein), individually or in the aggregate, would not reasonably be
expected to have a Parent Material Adverse Effect (as defined below) on
Parent which failure has not been or is incapable of being cured by Parent
within 10 business days after its receipt of written notice thereof from
the Company; or
(f) prior to the Specified Date by the Company in the circumstances
described below under "Takeover Proposals" in which such termination is
permitted, subject to compliance by the Company with the notice provisions
described below and payment of the Termination Fee (as defined below) and
expense reimbursement provisions described below.
Takeover Proposals. The Merger Agreement provides that the Company will
not, nor will it permit any of its subsidiaries to, nor will it authorize or
permit any director, officer or employee of the Company or any of its
subsidiaries or any investment banker, attorney, accountant or other advisor or
representative of the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage any Takeover Proposal, or (ii)
enter into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in any effort or
attempt by any person with respect to, any Takeover Proposal; provided that at
any time prior to the acceptance for payment of Shares pursuant to and subject
to the conditions of the Offer (the "Specified Date"), the Board of Directors of
the Company may, in response to a Superior Proposal (as defined below) or a bona
fide Takeover Proposal that such Board of Directors determines in good faith is
reasonably likely to lead to a Superior Proposal (a "Likely Superior Proposal"),
in each case that was unsolicited, and subject to compliance with the
notification obligations described below, (x) furnish information with respect
to the Company and its subsidiaries to the person making such Superior Proposal
or Likely Superior Proposal (and its representatives) pursuant to a customary
confidentiality agreement (which confidentiality agreement contains terms that
are no less favorable to the Company than the terms of the Confidentiality
Agreement dated December 4, 2000, between Parent and the Company (as it may be
amended from time to time, the "Confidentiality Agreement"); and (y) participate
in discussions or negotiations with the person making such Superior Proposal or
Likely Superior Proposal (and its representatives) regarding such Superior
Proposal or Likely Superior Proposal.
"Superior Proposal" means any offer not solicited by the Company made by a
third party to consummate a tender offer, exchange offer, merger, consolidation
or similar transaction which would result in such third party (or its
shareholders) owning, directly or indirectly, more than 50% of the Shares then
outstanding (or of the surviving entity in a merger) or all or substantially all
of the assets of the Company and its subsidiaries and otherwise on terms which
the Board of Directors of the Company determines in good faith (following
receipt of the advice of a financial advisor of nationally recognized
reputation) to provide consideration to the holders of Shares with a greater
value than the consideration payable in the Merger.
"Takeover Proposal" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of 20% or more of the
assets of the Company and its subsidiaries, taken as a whole, or 20% or more of
any class or series of equity securities of the Company or any of its
subsidiaries, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% or more of any class or series of
equity securities of the Company or any of its subsidiaries, or any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by the Merger Agreement.
The Merger Agreement further provides that, except as described below,
neither the Board of Directors of the Company nor any committee thereof may (i)
withdraw (or modify in a manner adverse to Parent or the Purchaser) or propose
to withdraw (or modify in a manner adverse to Parent or the Purchaser) the
approval
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or recommendation by such Board of Directors or any such committee of the Merger
Agreement, the Offer or the Merger, (ii) adopt, approve or recommend, or propose
to adopt, approve or recommend, any Takeover Proposal, (iii) cause or permit the
Company to enter into any letter of intent, memorandum of understanding,
agreement in principle, acquisition agreement, merger agreement or other similar
agreement (each, an "Acquisition Agreement") constituting any Takeover Proposal
(other than a confidentiality agreement referred to above and entered into under
the circumstances described above) or (iv) agree or resolve to take any of the
actions set forth in clauses (i), (ii) or (iii) of this sentence.
Notwithstanding the foregoing, at any time prior to the Specified Date, the
Board of Directors of the Company may, in response to a Superior Proposal that
was unsolicited, withdraw or modify the recommendation by such Board of
Directors of the Merger Agreement, the Offer or the Merger or terminate the
Merger Agreement, if such Board of Directors determines in good faith (after
taking into account any changes to the terms of the Merger Agreement proposed in
writing by Parent in response to such Superior Proposal and after consultation
with a financial advisor of nationally recognized reputation) that such Superior
Proposal, as modified as a result of any negotiations, provides consideration to
the Company's shareholders greater than that provided by Parent pursuant to the
Merger Agreement (and concurrently with or after such termination, if it so
chooses, cause the Company to enter into any Acquisition Agreement with respect
to any Superior Proposal), but only at a time that is prior to the Specified
Date and is after the third business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company is prepared to
accept a Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal.
In addition to the obligations of the Company described in the preceding
paragraphs, the Merger Agreement provides that the Company will promptly (and in
no event later than 24 hours) advise Parent orally and in writing of any request
for information that the Company reasonably believes could lead to or
contemplates a Takeover Proposal or of any Takeover Proposal, or any inquiry the
Company reasonably believes could lead to any Takeover Proposal, the terms and
conditions of such request, Takeover Proposal or inquiry (including any
subsequent amendment or other modification to such terms and conditions) and the
identity of the person making any such request, Takeover Proposal or inquiry.
The Company shall promptly keep Parent informed in all material respects of the
status and details (including amendments or proposed amendments) of any such
request, Takeover Proposal or inquiry.
The Merger Agreement provides that the provisions described above will not
prohibit the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with applicable law; provided,
however, that unless it is permitted to do so as described above, neither the
Company nor the Board of Directors of the Company nor any committee thereof
shall withdraw or modify, or propose to withdraw or modify, its position with
respect to the Merger Agreement, the Offer or the Merger or adopt, approve or
recommend, or propose to adopt, approve or recommend, any Takeover Proposal.
Fees and Expenses; Termination Fee. The Merger Agreement provides that
except as set forth below, all fees and expenses incurred in connection with the
Merger Agreement, the Offer, the Merger and the other transactions contemplated
by the Merger Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
In the event that (i)(A) first, a Takeover Proposal shall have been
publicly proposed or publicly announced or any person has publicly announced an
intention (whether or not conditional and whether or not withdrawn) to make a
Takeover Proposal, thereafter (B) the Merger Agreement is terminated by either
Parent or the Company as described above in paragraph (b)(i) under "Termination
of the Merger Agreement" and (C) within 12 months after such termination, the
Company or any of its subsidiaries enters into any Acquisition Agreement with
respect to, or consummates, any Takeover Proposal, or (ii) the Merger Agreement
is terminated by Parent as described above in paragraph (c) under "Termination
of the Merger Agreement" or by the Company as described in paragraph (f) under
"Termination of the Merger Agreement", then the Company shall pay Parent a fee
equal to $18,000,000 (the "Termination Fee") by wire transfer of same day funds,
in the case of a payment as a result of any event referred to in subsection (i)
upon
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the first to occur of the events described in subsection(i)(C), and in the case
of a payment as a result of subsection (ii) above, promptly, but in no event
later than the date of such termination); provided, however, that for purposes
of this paragraph, the references to "20%" in the definition of "Takeover
Proposal" shall be deemed to be references to "50%". The parties have agreed
that if the Company fails to promptly pay the amounts due pursuant to this or
the following paragraph and, in order to obtain such payment, Parent commences a
suit that results in a judgment against the Company for the amounts set forth in
this or the following paragraph, as applicable, the Company shall pay to Parent
interest on such amounts at the prime rate of Bank of America, N.A. in effect on
the date such payment was required to be made.
The Company shall reimburse Parent and the Purchaser for all their actual
and documented out-of-pocket expenses incurred in connection with the Merger
Agreement, the Offer, the Merger and the other transactions contemplated by the
Merger Agreement (a) in the event the Merger Agreement is terminated in the
circumstances described in subsection (i) of the immediately preceding paragraph
upon the first to occur of the events described in subsection (i)(C), or (b) in
the event the Merger Agreement is terminated in the circumstances described in
subsection (ii) of the immediately preceding paragraph, promptly, but in no
event later than the date of such termination; provided that the aggregate
amount of such reimbursement together with the Termination Fee shall not exceed
$21,000,000 in the aggregate.
Conduct of Business. The Merger Agreement provides that during the period
from the date of the Merger Agreement to the Effective Time, except (i) as
consented to in writing by Parent, (ii) as specifically contemplated by the
Merger Agreement, or (iii) as disclosed on the Company's disclosure schedule to
the Merger Agreement, the Company shall, and shall cause its subsidiaries to,
carry on their respective businesses in the ordinary course consistent with past
practice and use their commercially reasonable efforts to comply with all
applicable laws, rules and regulations and, to the extent consistent therewith,
use their commercially reasonable efforts to preserve their assets and
technology and preserve their relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with them
in all material respects. Without limiting the generality of the foregoing, the
Company shall not, and shall not permit any of its subsidiaries to:
(i) (w) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of
its capital stock, other than quarterly cash dividends consistent with past
practice (x) purchase, redeem or otherwise acquire any shares of capital
stock or any other securities of the Company or its subsidiaries or any
options, warrants, calls or rights to acquire any such shares or other
securities, except with respect to redemption requirements pursuant to the
Company Stock Plans (as defined in the Merger Agreement), (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or any of its other
securities, or (z) liquidate or merge with any subsidiaries of the Company;
(ii) issue, deliver, sell, pledge or otherwise transfer or encumber
any shares of its capital stock, any other equity or voting interests or
any securities convertible into, or exchangeable for, or any options,
warrants, calls or rights to acquire, any such shares, voting securities or
convertible securities or any stock appreciation rights or other rights
that are linked to the price of the Shares (other than the issuance of
Shares upon the exercise of Company Stock Options (as defined in the Merger
Agreement) pursuant to the Benefit Plans (as defined in the Merger
Agreement) that were in existence on February 6, 2001);
(iii) amend its articles of incorporation or by-laws (or similar
organizational documents);
(iv) directly or indirectly acquire or agree to acquire (A) by merging
or consolidating with, or by purchasing all or a substantial portion of the
assets of, or by any other manner, any assets constituting a business or
any corporation, partnership, joint venture or association or other entity
or division thereof, or any direct or indirect interest in any of the
foregoing, or (B) any assets other than purchases of assets in the ordinary
course of business consistent with past practice;
(v) directly or indirectly sell, lease, license, sell and leaseback,
mortgage or otherwise encumber or subject to any pledge, claim, lien,
charge, encumbrance or security interest of any kind (except for
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purchase money security interests and other liens and encumbrances incurred
in the ordinary course of business) or otherwise dispose of any of its
properties or assets or any interest therein, except sales of (i) inventory
and obsolete assets in the ordinary course of business consistent with past
practice, and (ii) immaterial assets in the ordinary course of business
consistent with past practice (but specifically excluding joint venture
investments);
(vi) (x) repurchase, accelerate, prepay or incur any indebtedness or
guarantee any indebtedness of another person or issue or sell any debt
securities or options, warrants, calls or other rights to acquire any debt
securities of the Company or any of its subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other agreement
to maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the foregoing,
other than in the ordinary course of business consistent with past
practice, provided that the aggregate amount of indebtedness of the Company
shall not exceed $70,000,000 as of the Specified Date, (y) make any loans,
advances or capital contributions to, or investments in, any other person,
other than any direct or indirect wholly owned subsidiary of the Company,
or (z) enter into any hedging agreement or other financial agreement or
arrangement designed to protect the Company against fluctuations in
commodities prices or current exchange rates, except agreements or
arrangements in respect of contractual commitments of the Company entered
into in the ordinary course of business consistent with past practice;
(vii) incur or commit to incur any capital expenditures, whether by
acquisition or internal investment, or any obligations or liabilities in
connection therewith, other than capital expenditures which are reflected
on the Company's fiscal 2001 budget;
(viii) pay, discharge, settle or satisfy any claims (including claims
of shareholders), liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise), in excess of $500,000 in
the aggregate other than the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice or as required by
their terms as in effect on the date of the Merger Agreement of trade
payables and other similar liabilities and of claims, liabilities or
obligations reflected, reserved against or otherwise disclosed in the most
recent audited financial statements (or the notes thereto) of the Company
included in documents the Company has filed with the Commission (for
amounts not in excess of such reserves or as otherwise disclosed) or
incurred since the date of such financial statements in the ordinary course
of business consistent with past practice, or waive, release, grant or
transfer any right of material value, other than in the ordinary course of
business consistent with past practice, or waive any material benefits of,
or agree to modify in any adverse respect, or fail to enforce, or consent
to any matter with respect to which its consent is required under, any
confidentiality, standstill or similar agreement to which the Company or
any of its subsidiaries is a party;
(ix) (A) grant to any employee, officer, director, consultant or
independent contractor of the Company or any of its subsidiaries any
increase in compensation or pay any bonus, other than in the ordinary
course of business consistent with past practice, (B) establish any program
for or grant to any employee, officer, director, consultant or independent
contractor of the Company or any of its subsidiaries any increase in
severance or termination pay, (C) establish, adopt, enter into or amend any
Pension Plan (as defined in the Merger Agreement), (D) establish, adopt,
enter into or amend in any material respect any collective bargaining
agreement or Benefit Plan, (E) take any action to accelerate any rights or
benefits, take any action to fund or in any other way secure the payment of
compensation or benefits under any Pension Plan or Benefit Plan, or make
any material determinations not in the ordinary course of business
consistent with past practice, under any collective bargaining agreement or
Benefit Plan or Pension Plan, or (F) amend or modify or grant any Company
Stock Options, other than as provided below under "Benefits Matters,"
including any payment of cash pursuant thereto, in each case above other
than (i) changes that are required by applicable law, or (ii) to satisfy
obligations existing as of February 6, 2001;
(x) fail to maintain existing insurance at levels substantially
comparable to current levels or otherwise in a manner inconsistent with
past practice;
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(xi) transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Intellectual Property Rights (as defined
in the Merger Agreement) of the Company and its subsidiaries other than in
the ordinary course of business consistent with past practices; provided
that in no event shall the Company license on an exclusive basis or sell
any Intellectual Property Rights of the Company or its subsidiaries;
(xii) enter into or amend any agreements pursuant to which any person
is granted exclusive marketing, manufacturing or other rights with respect
to any material Company product, process or technology;
(xiii) enter into or amend any contract or other agreement, whether
written or oral, that contains any guarantees as to the Company's or any
subsidiary's future revenues;
(xiv) except with respect to the acquisition (and related
construction) of that certain real property and new headquarters facility
located at 5801 Dunwoody Road, Atlanta, Georgia 30319, obtain any real
property, whether through acquisition, lease, sublease or otherwise, other
than in the ordinary course of business consistent with past practice in
connection with contracts with contracts with customers;
(xv) hire in excess that number of additional employees required in
the good faith judgment of the Company;
(xvi) except insofar as may be required by a change in generally
accepted accounting principles in the United States or generally accepted
accounting principles of the applicable jurisdiction or changes in
applicable law, make any changes in accounting methods, principles or
practices;
(xvii) take any action that would reasonably be expected to result in
(A) any representation and warranty of the Company set forth in the Merger
Agreement that is qualified as to materiality becoming untrue, (B) any such
representation and warranty that is not so qualified becoming untrue in any
material respect or (C) any condition to the Offer or the Merger not being
satisfied;
(xviii) authorize any of, or commit, resolve or agree to take any of,
the foregoing actions.
Board of Directors. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment by the Purchaser for, any Shares pursuant
to the Offer, the Purchaser shall be entitled to designate such number of
directors on the Board of Directors of the Company as will give the Purchaser,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board of Directors of the Company equal to that number of directors, rounded
up to the next whole number, which is the product of (a) the total number of
directors on the Board of Directors of the Company (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of Shares so accepted for payment and paid for by the
Purchaser bears to (ii) the number of such Shares outstanding, and the Company
shall, at such time, cause the Purchaser's designees to be so elected; provided,
however, that in the event that the Purchaser's designees are appointed or
elected to the Board of Directors of the Company, until the Effective Time, the
Board of Directors of the Company shall have at least a sufficient number of
directors (as required by the rules of the NYSE) who were directors on February
6, 2001, and who are not officers of the Company or representatives of any
affiliates of the Company (the "Independent Directors"); and provided further
that, in such event, if the number of Independent Directors shall be reduced
below the number required by the rules of the NYSE for any reason whatsoever,
any remaining Independent Directors (or Independent Director, if there shall be
only one remaining) shall be entitled to designate persons to fill such
vacancies who shall be deemed to be Independent Directors for purposes of the
Merger Agreement or, if no Independent Directors then remain, the other
directors shall designate a sufficient number of persons to fill such vacancies
who are not officers, shareholders or affiliates of the Company, Parent or the
Purchaser, and such persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. Subject to applicable law, the Company shall
take all action requested by Parent necessary to effect any such election. In
connection with the foregoing, the Company has agreed to promptly, at the option
of the Purchaser, either increase the size of the Board of Directors of the
Company or obtain the resignation of such number of its directors as is
necessary to enable the Purchaser's designees to be elected or appointed to the
Board of Directors of the Company as provided above.
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Prior to the Effective Time, the Company shall cause each member of its
Board of Directors, other than the Purchaser's designees, to execute and deliver
a letter effectuating his or her resignation as a director effective immediately
prior to the Effective Time.
Stock Options and Restricted Stock. The Merger Agreement provides that
upon payment by Purchaser for the Shares pursuant to the Offer, each holder of a
Company Stock Option, whether or not then exercisable, which is then outstanding
shall be entitled to receive, in cancellation and full settlement of such
Company Stock Option, an amount equal to the product of (x) the number of Shares
provided in the Company Stock Option and (y) the excess, if any, of the price
per Share paid pursuant to the Offer over the exercise price per Share provided
for in the Company Stock Option (the "Option Consideration"). As soon as
practicable following payment by Purchaser for the Shares pursuant to the Offer,
but no later than the Effective Time, the Company shall pay (or cause to be
paid, as the case may be) the Option Consideration in cash to each holder of a
Company Stock Option to whom Option Consideration is payable. The Company shall
take such other actions available under the Company Stock Plans to effect the
cancellation of all Company Stock Options. The Company agrees to use
commercially reasonable efforts to obtain consents from the holders of such
Company Stock Options to their cancellation to the extent Parent determines such
consents to be advisable.
Notwithstanding any provision in any granting agreement or other document
to the contrary, all restrictions on the Shares granted under any of the Company
Incentive Plans (as that term is used in the Merger Agreement) shall lapse at
the Specified Date, and the holder of such restricted Shares shall be entitled
to tender such Shares in the Offer or receive for each restricted Share, in
cancellation and full settlement of such restricted Share, the price per Share
paid pursuant to the Offer in cash.
Benefits Matters. The Merger Agreement provides that the Company will take
all actions necessary and appropriate to terminate (i) the Company's Salary
Deferral Plan, (ii) the Company's 1996 Stock Incentive Plan (including all
management and executive stock programs under such plan), and (iii) the
Company's 1996 Non-Executive Stock Incentive Plan (including all management and
executive stock programs under such plan) at the Specified Date. Except for the
Company's Salary Deferral Plan and except as otherwise provided herein, from and
after the Specified Date, the surviving corporation shall continue to honor in
accordance with their respective terms the Benefit Plans, Pension Plans and all
of the Company's other employee benefit, compensation, employment, severance and
termination agreements, plans and policies, including any rights or benefits
arising as a result of the transactions contemplated by the Merger Agreement
(either alone or in combination with any other event); it being agreed and
acknowledged by Parent that the transactions contemplated by the Merger
Agreement constitute a "change of control" for all purposes under all such
agreements, plans and policies. To the extent that Shares are held by a trustee
of a Benefit Plan or Pension Plan, such Shares will be tendered in accordance
with the provisions of such plan. Immediately following any disposition of
Shares pursuant to the transactions described in this Offer to Purchase, the
Company will cause the trustee for the Salary Deferral Plan to prepay all
outstanding indebtedness of that plan prior to crediting a plan participant with
the net proceeds received from the tender of Shares.
After the Effective Time, employees of the Company or any of its
subsidiaries immediately prior to the Effective Time (the "Company Employees")
shall be provided benefits which are substantially similar to those provided by
the Company before the Effective Time, other than any equity-based benefits
provided before the Effective Time which shall be replaced by permitting Company
Employees to participate in the Compass Group Stock Bonus Program in effect in
2001, or another plan substantially similar thereto. Further, for a period of 10
days after February 6, 2001, Parent and the Company shall cause the offers of
employment made prior to February 6, 2001 to each of Glenn A. Davenport, K.
Wyatt Engwall, John E. Fountain, Jerry D. Underhill, Gary L. Gaddy, Richard C.
Roberson, Eugene Dolloff, Terry Ransom and George T. Levins to remain open for
acceptance by such persons. Such obligations shall not be obligations of Parent
or the Company after the expiration of such 10 day period except to the extent
provided in any such employment agreements as executed by such applicable
parties.
Nothing contained in the Merger Agreement shall be construed to prevent the
termination of employment of any individual Company Employee or, subject to
certain limitations therein, any change in the employee benefits available to
any individual Company Employee or the amendment or termination of any
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particular Benefit Plan, Pension Plan or other employee benefit plan, program,
policy or arrangement to the extent permitted by its terms as in effect
immediately prior to the Specified Date.
During the period from the date of the Merger Agreement to the Effective
Time, the Company will permit no further discounted purchases of the Shares with
director fees or deferred compensation through the Company Incentive Plans or
any deferred compensation plan for Company Directors.
All change of control agreements between the Company and any officer or
director of the Company shall be terminated at or prior to the Specified Date.
With respect solely to section 13 and section 14 of those indemnification
agreements by and between the Company and its officers and directors (which
sections 13 and 14 relate to the establishment of a trust and the obtaining of
the opinions of independent counsel), such provisions in the above-referenced
sections of such indemnification agreements shall be terminated at or prior to
the Effective Time. Notwithstanding the foregoing, all other provisions of such
indemnification agreements shall remain in full force and effect.
Indemnification and Insurance. Parent and the Purchaser have agreed in the
Merger Agreement that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the Effective Time
existing at February 6, 2001, in favor of the then current or former directors
or officers of the Company and its subsidiaries as provided in their respective
articles of incorporation or by-laws (or similar organizational documents) shall
be assumed and continued by the surviving corporation in the Merger, without
further action, at the Effective Time and shall survive the Merger and shall
continue in full force and effect in accordance with their terms.
In the event that the surviving corporation in the Merger or any of its
successors or assigns (i) consolidates with or merges into any other person and
is not the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) transfers or conveys all or substantially all its properties
and assets to any person, then, and in each such case, proper provision shall be
made so that the successors and assigns of the surviving corporation assume the
obligations described in this section "Indemnification and Insurance". In the
event that the surviving corporation is financially incapable of satisfying its
obligations described in this section, Parent shall satisfy such obligations.
In the Merger Agreement, Parent has agreed that for six years after the
Effective Time, the surviving corporation shall maintain in effect the Company's
current directors' and officers' liability insurance covering each person
currently covered by the Company's directors' and officers' liability insurance
policy for acts or omissions occurring prior to the Effective Time on terms with
respect to such coverage and amounts no less favorable in any material respect
to such directors and officers than those of such policy as in effect on the
date of the Merger Agreement; provided that (i) Parent may substitute therefor
policies of a reputable insurance company the material terms of which, including
coverage and amount, are no less favorable in any material respect to such
directors and officers than the insurance coverage otherwise required by such
provision of the Merger Agreement, and (ii) in no event shall Parent be required
to pay aggregate premiums for insurance described in this paragraph in excess of
200% of the amount of the aggregate premiums paid by the Company for 2000 for
such purpose; provided further that Parent shall nevertheless be obligated to
provide such coverage as may be obtained for such 200% amount. The Company
shall, to the fullest extent permitted under applicable law and regardless of
whether the Merger becomes effective, indemnify and hold harmless, and, after
the Effective Time, the surviving corporation shall, to the fullest extent
permitted under applicable law, indemnify and hold harmless each present and
former director and officer of the Company and each subsidiary of the Company
(the "Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as a director or officer occurring
before the Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) the Company or the surviving corporation, as the case may be, shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to the Company or the
surviving corporation, promptly after statements therefor are received, and (ii)
the Company or the surviving
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corporation, as the case may be, shall cooperate in the defense of any such
matter; provided, however, that the Company or the surviving corporation shall
not be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld); and provided further that neither
the Company nor the surviving corporation shall be obligated pursuant to the
obligations described in this paragraph to pay the fees and expenses of more
than one counsel (and one local counsel) for all Indemnified Parties in any
single action except to the extent that two or more of such Indemnified Parties
shall have conflicting interests in the outcome of such action.
Commercially Reasonable Efforts; Notification. The Merger Agreement
provides that each of the parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all actions that are necessary, proper or
advisable to consummate and make effective the Offer, the Merger and the other
transactions contemplated by the Merger Agreement, including using all
commercially reasonable efforts to accomplish the following: (i) the taking of
all commercially reasonable acts necessary to cause the conditions to the Offer
and the Merger to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings, including the making of all filings under the HSR Act
and the Exon Florio Amendment to the Defense Production Act of 1950, as amended,
promptly as reasonably practicable, and in any event, within 15 business days
after February 6, 2001, and (iii) the obtaining of all necessary consents,
approvals or waivers from third parties. In connection with and without limiting
the foregoing, the Company and its Board of Directors shall, if any provision of
the Company's articles of incorporation, bylaws or state takeover statute or
similar statute or regulation is or becomes applicable to the Merger Agreement,
the Offer, the Merger or any of the other transactions contemplated thereby, use
its commercially reasonable efforts to ensure that the Merger Agreement, the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement may be consummated as promptly as practicable on the terms
contemplated by the Merger Agreement and otherwise to minimize the effect of
such provision, statute or regulation on the Merger Agreement, the Offer, the
Merger and the other transactions contemplated thereby. The Company and Parent
shall keep the other apprised of the status of matters relating to the
completion of the transactions contemplated thereby and work cooperatively in
connection with obtaining any such waivers, consents, approvals, orders and
authorizations, including, without limitation: (i) promptly notifying the other
of, and if in writing, furnishing the other with copies of (or, in the case of
material oral communications, advise the other orally of) any communications
from or with any Governmental Entity with respect to the Offer, the Merger or
any of the other transactions contemplated by the Merger Agreement (except such
communications which counsel to the Company advises the Company is privileged
under the attorney-client privilege or similar privilege), (ii) permitting the
other party to review and discuss in advance, and considering in good faith the
views of one another in connection with, any proposed written (or material
proposed oral) communication with any Governmental Entity, (iii) not
participating in any meeting with any Governmental Entity unless it consults
with the other party in advance and to the extent permitted by such Governmental
Entity gives the other party the opportunity to attend and participate thereat,
(iv) furnishing the other party with copies of all correspondence, filings and
communications (and memoranda setting forth the substance thereof) between it
and any Governmental Entity with respect to the Merger Agreement, the Offer and
the Merger, and (v) furnishing the other party with such necessary information
and reasonable assistance as such other party may reasonably request in
connection with its preparation of necessary filings or submissions of
information to any Governmental Entity, and which is not of a privileged nature
or which contains competitively sensitive information. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) any representation or warranty made by it contained in the Merger Agreement
that is qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified becoming untrue
or inaccurate in any material respect or (ii) the failure by it to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under the Merger Agreement; provided that no
such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under the Merger Agreement.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties, including representations relating to
corporate existence and power; capitalization; corporate
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authorizations; subsidiaries; Commission filings; absence of certain changes;
litigation; contracts; absence of undisclosed liabilities; government
authorizations; compliance with laws; benefit plans; employment and labor
relations; environmental matters; taxes; intellectual property; accuracy of
certain disclosures; and the opinion of the Company's financial advisor.
Certain representations and warranties in the Merger Agreement made by the
Company and Parent are qualified as to "materiality" or "material adverse
effect". For purposes of the Merger Agreement and the Offer, the term "Material
Adverse Effect" means any state of facts, change, development, effect, event,
condition or occurrence that is materially adverse to the business, assets,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, other than adverse changes resulting from (i)
general national, international or regional economic, financial or market
conditions; (ii) conditions, circumstances or changes affecting the foodservice
industry in general and not the Company specifically, or (iii) the announcement
or pendency of this Agreement or the Offer, Merger or other transactions
contemplated thereby (including if resulting therefrom, employee attrition or
modification of terms of contracts with clients or suppliers, or delay in
securing or loss of potential contracts or other business). For purposes of the
Merger Agreement and the Offer, the term "Parent Material Adverse Effect" means
any state of facts, change, development, effect, event, condition or occurrence
that is materially adverse to the business, assets, financial condition or
results of operations of Parent and its subsidiaries, taken as a whole, other
than (i) general national, international or regional economic, financial or
market conditions, (ii) adverse changes resulting from conditions, circumstances
or changes affecting the foodservice industry in general and not Parent
specifically, or (iii) with respect to the financial ability of Parent and
Purchaser, that prevents or materially impedes or delays the consummation of the
Offer, the Merger or the other transactions contemplated by the Merger
Agreement.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement may be amended by the parties at any time, whether before or after the
Company Shareholder Approval has been obtained; provided that, after the
purchase of Shares pursuant to the Offer, no amendment shall be made which
decreases the Offer Price and, after the Company Shareholder Approval has been
obtained, there shall be made no amendment that by law requires further approval
by the Company's shareholders without the further approval of the Company's
shareholders. The Merger Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties thereto. Following the election
or appointment of the Purchaser's designees to the Company's Board of Directors
as described above and prior to the Effective Time, the affirmative vote of a
majority of the Independent Directors then in office shall be required by the
Company to (i) amend or terminate the Merger Agreement by the Company, (ii)
exercise or waive any of the Company's rights or remedies under the Merger
Agreement, or (iii) extend the time for performance of Parent's and the
Purchaser's respective obligations under the Merger Agreement.
At any time prior to the Effective Time, the parties may (a) extend the
time for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
contained in the Merger Agreement or in any document delivered pursuant thereto,
or (c) waive compliance with any of the agreements or conditions contained
therein; provided that after the Company Shareholder Approval has been obtained,
there shall be made no waiver that by law requires further approval by such
shareholders of the parties without the further approval of such shareholders.
Any agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure or delay by any party to the Merger Agreement to assert any
of its rights under the Merger Agreement or otherwise shall not constitute a
waiver of such rights nor shall any single or partial exercise by any party to
the Merger Agreement of any of its rights under the Merger Agreement preclude
any other or further exercise of such rights or any other rights under the
Merger Agreement.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit (d)(1)
to the Schedule TO pursuant to Rule 14d-3 under the Exchange Act, together with
exhibits, furnishing certain additional information with respect to the Offer
(the "Schedule TO"). The Merger Agreement should be read in its entirety for a
more complete description of the matters summarized above.
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The Confidentiality Agreement
Pursuant to the Confidentiality Agreement, the Company and Parent agreed to
keep confidential certain information provided by the Company or its
representatives. The Confidentiality Agreement also contains customary
standstill provisions. The Merger Agreement provides that certain information
exchanged pursuant to the Merger Agreement will be subject to the
Confidentiality Agreement.
Employment Agreements
In connection with the execution of the Merger Agreement, the Company
entered into an Employment Agreement dated February 5, 2001 with Mr. Davenport
(the "Davenport Agreement"). The Davenport Agreement provides that Mr. Davenport
will, among other things, (i) be employed as the President and Chief Executive
Officer of the Company; (ii) receive an annual base salary of $450,000; (iii) be
entitled to an annual bonus of up to 125% of annual base salary; (iv) receive
benefits pursuant to the Company's Executive Supplemental Pension Plan (the
"ESP"); (v) be entitled to receive all other benefits available to senior
executives of the Company; (vi) receive one year's annual salary and accrued
bonus if terminated due to death; (vii) receive two times annual base salary if
terminated due to Termination Without Cause or Resignation by the Employee for
Good Reason (as such terms are defined in the Davenport Agreement); and (viii)
not solicit employees or compete with the Company for two years following
termination of employment.
Additionally, Mr. Davenport, the Company and Compass Group USA, Inc., a
wholly-owned indirect subsidiary of Parent ("Compass"), entered into an addendum
to the Davenport Agreement which provides that additional terms will become
applicable to Mr. Davenport's employment in the event that the Offer and the
Merger are completed within 120 days following February 5, 2001. Once effective,
those provisions provide that Mr. Davenport will, among other things, (i) be an
officer of Compass and have responsibility for substantially all of the
healthcare and senior dining foodservice business in the United States for
Compass and its subsidiaries, (ii) receive an initial grant of options to
purchase 175,000 shares of common stock of Parent in accordance with the Compass
Group PLC Executive Share Option Plan, (iii) beginning in October 2001 and
continuing so long as Mr. Davenport remains employed with the Company under the
provisions of the Davenport Agreement, receive an annual grant of options to
purchase not less than 60,000 shares of common stock of Parent, and (iv)
participate in various Company and Parent compensation and benefit plans
including certain medical, dental, deferred compensation, life insurance and
bonus plans. Furthermore, once effective, the addendum provides that the Change
of Control Agreement and sections 13 and 14 of the Indemnification Agreement
executed by Mr. Davenport and the Company shall terminate.
Also in connection with the Merger Agreement, the Company offered similar
employment agreements to each of K. Wyatt Engwall, Gary L. Gaddy, Jerry D.
Underhill, George T. Levins, Richard C. Roberson, and John E. Fountain. Each of
these employment agreements is on substantially the same terms as the Davenport
Agreement and provides for such positions, salaries, and bonuses as are set
forth below:
NAME POSITION ANNUAL BASE SALARY MAXIMUM BONUS
- ---- --------------------------------------- ------------------ -------------
K. Wyatt Engwall............ Chief Financial Officer $222,000 100%
Gary L. Gaddy............... Executive Vice President, Sales $212,000 100%
Jerry D. Underhill.......... President, Morrison Hospital Food $225,000 100%
Services
George T. Levins............ Executive Vice President, Operations $157,500 75%
Richard C. Roberson......... Executive Vice President, Operations $161,000 75%
John E. Fountain............ General Counsel $155,000 60%
The employment agreements for such persons also provide that such persons
will (i) receive benefits pursuant to the Company's ESP, (ii) be entitled to
receive all other benefits available to senior executives of the Company, (iii)
receive one year's annual salary and accrued bonus if terminated due to death,
(iv) receive one and one-half times annual base salary if terminated due to
Termination Without Cause or Resignation by the Employee for Good Reason (as
such terms are defined in each respective employment agreement) and (v) not
solicit employees or compete with the Company for 18 months following
termination of employment.
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Additionally, in connection with the employment agreements offered to the
above-listed individuals, the Company and Compass offered certain benefits to
such persons. Such benefits will become effective in the event that the Offer
and the Merger are completed within 120 days following February 5, 2001. These
benefits are similar to those provided to Mr. Davenport except with respect to
the following items:
INITIAL/SUBSEQUENT
GRANT OF PARENT
NAME OPTIONS
- ---- ------------------
K. Wyatt Engwall.......................................... 50,000/30,000
Gary L. Gaddy............................................. 50,000/30,000
Jerry D. Underhill........................................ 50,000/30,000
George T. Levins.......................................... 15,000/15,000
Richard C. Roberson....................................... 15,000/15,000
John E. Fountain.......................................... 15,000/10,000
In addition to these employment agreements, the Company and Compass offered
certain benefits to supplement the existing employment agreement between the
Company and Eugene D. Dollof. Such benefits will become effective in the event
that the Offer and the Merger are completed within 120 days following February
5, 2001. These benefits are similar to those provided to Mr. Davenport except
with respect to the following items:
INITIAL/SUBSEQUENT
GRANT OF PARENT
NAME OPTIONS
- ---- ------------------
Eugene D. Dolloff......................................... 50,000/30,000
As of the date hereof, the Company has entered into agreements with Mr.
Engwall and Mr. Gaddy. The offers to the other officers of the Company described
above remained outstanding on the date hereof.
The foregoing summary of the employment agreements, is qualified in its
entirety by reference to the signed employment agreements, which are attached
hereto as Exhibits (d)(3) to (d)(5) to the Schedule TO.
Plans For The Company
If a majority of the outstanding Shares are purchased by the Purchaser
pursuant to the Offer, Parent may designate its representatives as a majority of
the Company's Board of Directors. Following completion of the Offer and the
Merger, Parent's healthcare and senior living business will be combined with the
Company and will operate as a separate indirect subsidiary of Purchaser.
Parent's principal reason for acquiring the Company is the strategic fit of the
Company's operations with Parent's operations. Parent intends to continue to
review the Company and its assets, corporate structure, dividend policy,
capitalization, operations, properties, policies, management and personnel and
to consider, subject to the terms of the Merger Agreement, what, if any, changes
would be desirable in light of the circumstances then existing, and reserves the
right to take such actions or effect such changes as it deems desirable. So long
as there are holders of Shares other than Parent or any of its subsidiaries,
Parent expects that the Board of Directors of the Company will not declare
dividends on the Shares; therefore unless the Offer is extended past March 30,
2001, the Company would not expect to declare any additional dividends.
Dissenters' Rights
THE FOLLOWING DESCRIPTION OF CERTAIN PROVISIONS OF THE GBCC IS NOT
NECESSARILY COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE GBCC.
Shareholders do not have dissenters' rights as a result of the Offer.
However, if the Merger is consummated, shareholders of the Company at the time
of the Merger who do not vote in favor of the Merger and comply with all
statutory requirements will have the right under the GBCC to demand and receive
payment in cash of the fair value of their Shares outstanding immediately prior
to the effective date of the Merger in accordance with Article 13 of the GBCC.
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Such dissenters' rights, if the statutory procedures are complied with,
could under certain circumstances lead to a judicial determination of the fair
value of the Shares (exclusive of any appreciation or depreciation in
anticipation of the Merger) and to receive payment of such fair value in cash.
Any such judicial determination of the fair value of such Shares could be based
upon considerations other than or in addition to the price paid in the Offer and
the Merger and the market value of the Shares. Shareholders should recognize
that the value so determined could be higher than, lower than or equal to the
price per Share paid pursuant to the Offer or the consideration per Share to be
paid in the Merger.
If any holder of Shares who demands payment for his or her Shares under the
GBCC fails to perfect, or effectively withdraws or loses his or her dissenters'
rights, as provided in the GBCC, the Shares of such holder will be converted
into the Offer Price in accordance with the Merger Agreement. A shareholder may
withdraw his or her demand for payment by delivery to Parent of a written
withdrawal of his or her demand for payment and acceptance of the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF SHAREHOLDERS DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE GBCC OR THOSE PROCEDURES TO BE FOLLOWED BY
SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE GBCC. FAILURE TO FOLLOW THE PROCEDURES SET FORTH IN
SUCH PROVISIONS MAY RESULT IN A LOSS OF SUCH RIGHTS.
Going-Private Transactions
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions. The Purchaser does not
believe that Rule 13e-3 will be applicable to the Merger unless the Merger is
consummated more than one year after the termination of the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the Merger and the consideration offered
to minority shareholders in the Merger be filed with the Commission and
disclosed to shareholders prior to the consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
As discussed in Section 12, the Merger Agreement provides that from
February 6, 2001, to the Effective Time, without the prior approval of Parent,
the Company may not declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of, any of
its capital stock other than quarterly cash dividends consistent with past
practice.
14. CERTAIN CONDITIONS OF THE OFFER
The Merger Agreement provides that the Purchaser will not be required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-l(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares promptly after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless:
(i) there shall have been validly tendered and not withdrawn prior to
the expiration of the Offer that number of Shares which together with any
Shares beneficially owned by Parent, Purchaser or any of their affiliates,
would represent a majority of the issued and outstanding Shares determined
on a fully diluted basis (the "Fully Diluted Shares") on the date of
purchase; and
(ii) any requisite waiting period under the HSR Act (and any
extensions thereof) applicable to the purchase of Shares pursuant to the
Offer and to the Merger shall have been terminated or shall have expired
without the imposition of any conditions or restrictions which in the
judgment of either party would adversely impact the economic or business
benefits of the transactions contemplated by the Merger Agreement.
Furthermore, notwithstanding any other term of the Offer or the Merger
Agreement, the Purchaser will not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, to pay for any Shares
not yet accepted for payment or paid for, and, subject to the Merger Agreement,
may
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terminate or amend the Offer or, if, immediately prior to the applicable
Expiration Date, any of the following conditions exists:
(a) there shall be pending or formally threatened any suit, action or
proceeding by any Governmental Entity, (i) challenging the acquisition by
Parent or the Purchaser of any shares of common stock of the Company,
seeking to restrain or prohibit consummation of the Offer or the Merger, or
seeking to place limitations on the ownership of Shares (or shares of
common stock of the Company following the Merger) by Parent or the
Purchaser, (ii) seeking to prohibit or limit the ownership or operation by
the Company or Parent and their respective subsidiaries as the business or
assets of the Company or Parent and their respective subsidiaries, or to
compel the Company or Parent and their respective subsidiaries to dispose
of or hold separate any material portion of the United States based
business or assets of the Company or Parent and their respective
subsidiaries taken as a whole, as a result of the Offer, the Merger or any
of the other transactions contemplated by the Merger Agreement, (iii)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the
Company, or (iv) which otherwise is reasonably expected to have a Material
Adverse Effect; in each of (i) through (iv) above, subject to the parties'
obligations to use their commercially reasonable efforts to avoid such an
occurrence as set forth in Section 12 hereof;
(b) any Legal Restraint which may result in the filing of any
injunction or other order that has the effect of preventing the purchase of
Shares pursuant to the Offer or the Merger shall be in effect; provided,
however, that each of Parent, the Purchaser and the Company shall have used
commercially reasonable efforts to prevent the entry of any such injunction
or other order and to appeal as promptly as practicable any injunction or
other order that may be entered;
(c) except as set forth in the Company's disclosure schedule to the
Merger Agreement or in the documents that the Company had filed with the
Commission prior to February 6, 2001, since February 6, 2001, there shall
have been any state of facts, change, development, effect, event, condition
or occurrence that, individually or in the aggregate, constitutes or would
reasonably be expected to have, a Material Adverse Effect;
(d) (i) the representation and warranty of the Company with respect to
its capital structure and outstanding equity interests shall not be true
and correct in all material respects, (ii) the other representations and
warranties of the Company contained in the Merger Agreement that are
qualified by reference to Material Adverse Effect shall not be true and
correct, or (iii) the other representations and warranties of the Company
contained in the Merger Agreement shall not be true and correct, except for
such failures to be true and correct that, individually and in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect;
(e) the Company shall have failed to perform in any material respect
any material obligation required to be performed by it under the Merger
Agreement at or prior to the Specified Date;
(f) the sum of the Company's indebtedness for money borrowed
(including obligations under capital leases) exceeds $70,000,000;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of the Purchaser or Parent in any such case,
and regardless of the circumstances giving rise to any such condition (including
any action or inaction by Parent, Purchaser or any of its affiliates other than
any action or inaction constituting a breach of the Merger Agreement), makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser or Parent regardless of the
circumstances giving rise to such condition or, may be waived by the Purchaser
or Parent in whole or in part at any time and from time to time in their
reasonable discretion. The failure by Parent, the Purchaser or any other
affiliate of Parent at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right; the waiver of any such right with
respect to particular
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facts and circumstances shall not be deemed a waiver with respect to any other
facts and circumstances and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company and discussions of representatives
of Parent with representatives of the Company, none of the Purchaser, Parent or
the Company is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a whole,
that might be adversely affected by the Purchaser's acquisition of Shares (and
the indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein or of any approval or other action by any Governmental
Entity that would be required or desirable for the acquisition or ownership of
Shares by the Purchaser as contemplated herein. Should any such approval or
other action be required or desirable, Parent and the Purchaser currently
contemplate that such approval or other action will be sought, except as
described below under "State Takeover Laws". While (except as otherwise
expressly described in this Section 15) the Purchaser does not presently intend
to delay the acceptance for payment of or payment for Shares tendered pursuant
to the Offer pending the outcome of any such matter, there can be no assurance
that any such approval or other action, if needed, would be obtained or would be
obtained without substantial conditions or that failure to obtain any such
approval or other action might not result in consequences adverse to the
Company's business or that certain parts of the Company's business might not
have to be disposed of if such approvals were not obtained or such other actions
were not taken or in order to obtain any such approval or other action. If
certain types of adverse action are taken with respect to the matters discussed
below, the Purchaser could, subject to the terms and conditions of the Merger
Agreement, decline to accept for payment or pay for any Shares tendered. See
Section 14 for a description of certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. Mite Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions. Subsequently, a number of U.S. federal courts
ruled that various state takeover statutes were unconstitutional insofar as they
apply to corporations incorporated outside the state of enactment.
The Company is incorporated under the laws of the State of Georgia. In
general, Section 14-2-1132 of the GBCC ("Section 14-2-1132") prevents an
"interested shareholder" (including a person who owns or has the right to
acquire 10% or more of the voting power of the outstanding voting shares of a
corporation) from engaging in a "business combination" (defined to include
mergers and certain other actions) with a Georgia corporation for a period of
five years following the date such person became an interested shareholder
unless (i) such interested shareholder, prior to becoming an interested
shareholder, obtained the approval of the Board of Directors of either the
business combination or the transaction that resulted in such person becoming an
interested shareholder, (ii) such interested shareholder became the beneficial
owner of at least 90% of the outstanding Shares of voting stock of the Company
(excluding Shares owned by persons who are directors, officer, their affiliates
or associates and by subsidiaries of the Company and certain employee
shareholder plans) in the same transaction in which the interested shareholder
became an interested shareholder or (iii) on or subsequent to the date the
interested shareholder became an interested shareholder, the interested
shareholder becomes the beneficial owner of at least 90% of the outstanding
voting stock of the Company (excluding shares owned by persons who are directors
or officers, their affiliates or associates and by subsidiaries of the Company
and certain employee shareholder plans) and the business combination is
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approved by holders of a majority of the voting stock entitled to vote,
excluding voting stock beneficially owned by the interested shareholder or by
persons who are directors or officers and by subsidiaries of the Company and
certain employee shareholder plans. The Offer, the Merger and the Merger
Agreement have been unanimously approved by the Company's Board of Directors.
Accordingly, Section 14-2-1132 will be inapplicable to the Merger.
Based on information supplied by the Company, the Purchaser does not
believe that any other state takeover statutes or similar laws purport to apply
to the Offer or the Merger. Neither the Purchaser nor Parent has currently
complied with any state takeover statute or regulation. The Purchaser reserves
the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or the
Merger, the Purchaser might be required to file certain information with, or to
receive approvals from, the relevant state authorities, and the Purchaser might
be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in consummating the Offer or the Merger. In such case, the
Purchaser may not be obligated to accept payment or pay for any Shares tendered
pursuant to the Offer. See Section 14.
Antitrust
United States Antitrust Law. Under the provisions of the HSR Act
applicable to the Offer, the acquisition of Shares under the Offer may be
consummated after the expiration of a 15-calendar day waiting period commenced
by the filing by Parent of a Notification and Report Form, unless Parent
receives a request for additional information or documentary material from the
Antitrust Division of the Department of Justice or the Federal Trade Commission
or unless early termination of the waiting period is granted. Parent filed the
Notification and Report Form on February 13, 2001. If, within the initial 15-day
waiting period, either the Antitrust Division or the FTC requests additional
information from Parent concerning the Offer, the waiting period will be
extended and would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Parent with such
request. Only one extension of the waiting period pursuant to a request for
additional information is authorized by the HSR Act. Thereafter, such waiting
period may be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transaction, the
parties frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. Expiration or
termination of the applicable waiting period under the HSR Act is a condition to
the Purchaser's obligation to accept for payment and pay for Shares tendered
pursuant to the Offer.
The Merger will not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if such a challenge is made, of the result thereof.
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16. FEES AND EXPENSES
Credit Suisse First Boston Corporation is acting as Dealer Manager in
connection with the Offer and is providing certain financial advisory services
to Parent and the Purchaser in connection with the Offer. Credit Suisse First
Boston Corporation will receive reasonable and customary compensation for its
services related to the Offer and will be reimbursed for certain out-of-pocket
expenses. Parent and the Purchaser have agreed to indemnify Credit Suisse First
Boston Corporation and certain related parties against certain liabilities,
including liabilities under the federal securities laws, arising out of its
engagement. The Board of Parent also received advice from Schroder Salomon Smith
Barney.
Parent and the Purchaser have retained MacKenzie Partners, Inc. to act as
the Information Agent and SunTrust Bank to serve as the Depositary in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the U.S. federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager) in connection
with the solicitation of tenders of Shares pursuant to the Offer. Brokers,
dealers, banks, trust companies and other members will be reimbursed by the
Purchaser upon request for customary mailing and handling expenses incurred by
them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. Neither the Purchaser nor Parent is aware of any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. To the extent the Purchaser or
Parent becomes aware of any state law that would limit the class of offerees in
the Offer, the Purchaser will amend the Offer and, depending on the timing of
such amendment, if any, will extend the Offer to provide adequate dissemination
of such information to holders of Shares prior to the expiration of the Offer.
In any jurisdiction the securities, blue sky or other laws of which require the
Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Parent and the Purchaser have filed with the Commission the Schedule TO and
may file amendments thereto. In addition, the Company has filed the Schedule
14D-9 pursuant to Rule 14d-9 under the Exchange Act, together with exhibits,
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the Commission).
YORKMONT ONE, INC.
February 16, 2001
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT.
On July 27, 2000, Compass Group PLC ("Former Compass") merged with Granada
Group PLC to form Granada Compass plc. Prior to the merger, the boards of both
companies agreed that, as soon as practicable following the merger, they would
separate the hospitality and media businesses of Granada Compass by means of a
demerger. The demerger became effective on February 2, 2001, reestablishing the
independent Compass Group, PLC ("New Compass") and a new entity, Granada plc.
References in this section to Parent shall mean both Former Compass and New
Compass. The name, citizenship, business address, present principal occupation
or employment and five-year employment history of each director and executive
officer of Parent and certain other information are set forth below. Unless
otherwise indicated below, (1) the address of each Parent, director and
executive officer is c/o Compass Group PLC, Guildford Street, Chertsey, Surrey,
England KT16 9BA; (2) each occupation set forth opposite an individual's name
also refers to employment with Former Compass; and (3) the directors and
officers listed below are citizens of the United Kingdom.
NAME AND CITIZENSHIP POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
(AGE AT 2/1/01) HELD WITH PARENT DURING PAST FIVE YEARS; OUTSIDE DIRECTORSHIPS
- -------------------- ------------------------- ---------------------------------------------
Francis H. Mackay(1, 2) Executive Chairman Appointed Chief Executive of Parent in 1991
(56) and additionally Deputy Chairman in 1994;
became Executive Chairman of Parent in July
1999. Non-executive Director of Centrica
PLC. c/o Charter Court, 50 Windsor Road,
Slough, Berkshire, SL1 2HA, UK.
Michael J. Bailey(1, 2) Director, Chief Executive Director of Parent since 1995 and Chief
(52) Officer Executive officer of Parent's North America
Division from 1994 to 1999. Mr. Bailey
became Chief Executive in July 1999.
Dennis P. Cassidy(1, 2A) Non-executive Director Non-executive Director of Parent since June
(67) 1994; Non-executive Director of Forever
Broadcasting PLC; formerly Chairman of
Satellite Information Systems, Kingsbury
Group PLC, Newcastle United PLC, Liberty
Public Limited Company, The Oliver Group
plc, Ferguson International Holdings PLC
and The Boddington Group PLC and was
formerly Seeboard PLC, The Involvement &
Participation Association, and BAA plc. c/o
130 Wilton Road, London SW1V 1LQ.
S-1
40
NAME AND CITIZENSHIP POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
(AGE AT 2/1/01) HELD WITH PARENT DURING PAST FIVE YEARS; OUTSIDE DIRECTORSHIPS
- -------------------- ------------------------- ---------------------------------------------
Peter E.B. Cawdron(1, 2A) Senior Non-executive Non-executive Director of Parent since 1993
(57) Director, Deputy and Deputy Chairman since July 1999;
Chairman, formerly a Director of Grand Metropolitan
plc, Inntrepreneur Pub Company Limited,
Pembertons' Group plc, Tetley Group plc and
Welcome Break Holdings Limited and is now a
Non-executive Director of the following
companies: Capita Group plc, Christian
Salvesen plc, Johnston Press plc, ARM
Holdings plc, Capital Radio plc, COIF
Nominees Limited, The Girls' Education
Company Limited, Lupus Capital plc, Private
Investor Capital Limited, Prospect Digital
Media limited and Ragged Bears Limited, and
Express Dairies plc. c/o Express House,
Meridian East, Meridian Business Park,
Leicester LE3 2TP.
Alain F. Dupuis(1, 2) Director; Chief Executive Director of Parent since 1995 and Chief
Belgium (56) Officer, Global Executive Officer, Global Business Division
Business Division of Parent since 1997; founder of Ticket
Restaurant in Belgium and previously
Managing Director of Seafood Broiler, a
Californian restaurant chain, and National
Cleaning Contractor, a building maintenance
company in the US.
Valerie F. Gooding(1, 2A) Non-executive Director Non-executive Director of Parent since
(50) January 2000; Chief Executive of BUPA since
September 1996; a Non-executive Director of
BAA plc; formerly a director of Cable &
Wireless Communications plc. c/o Caxton
Way, Watford Business Park, Watford,
Hetfordshire WD1 8XH
Andrew P. Lynch(1, 2) Finance Director Finance Director of Parent since 1997. Prior
(43) to 1997, Finance Director of Parent's UK
Division.
Ronald M. Morley(2) Company Secretary Company Secretary since 1989.
(48)
- ---------------
(1) Director of Compass Group PLC
(2) Former Executive Director of Granada Compass plc
(2A) Former Non-executive Director of Granada Compass plc
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DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
NAME AND CITIZENSHIP POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
(AGE AT 2/1/01) HELD WITH PURCHASER DURING PAST FIVE YEARS; OUTSIDE DIRECTORSHIPS
- -------------------- ------------------------- ---------------------------------------------
Gary R. Green(3) Chief Executive Officer Chief Executive Officer of North America
(43) Division since July 1999; Chief Financial
Officer of Parent's North America Division
from 1994 to 1999.
Thomas G. Ondrof(3) Director, Chief Financial Chief Financial Officer of Parent's North
United States (36) Officer America Division since July 1999; Vice
President-Finance and Strategic Planning of
Parent's North America Division from June
1998 to July 1999; Corporate Controller of
Parent's North America Division from March
1996 to June 1998; Acquisitions and Senior
Financial Analyst for a predecessor of
Parent's North America Division from October
1991 to March 1996.
Lauren A. Stoery(3) Director, Vice President, Vice President, General Counsel and Secretary
United States (43) General Counsel and of Parent's North America Division since
Secretary March 1998; Senior Counsel for Whirlpool
Corporation from 1993 to 1998.
Anthony J. Gagliardi(3) Director President-Canteen Vending Services Division,
United States (51) a division of Parent's North America Division
since October 1995.
- ---------------
(3) c/o Compass Group USA, Inc., 2400 Yorkmont Road, Charlotte, North Carolina
28217
S-3
42
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
SUNTRUST BANK
BY HAND OR BY FACSIMILE
BY MAIL: OVERNIGHT COURIER: TRANSMISSION:
SunTrust Bank SunTrust Bank (For Eligible Institutions
Attn: Reorg Attn: Reorg only)
P.O. Box 4625 58 Edgewood Avenue (404) 332-3875
Atlanta, Georgia 30302 Suite 225
Atlanta, Georgia 30303
CONFIRM FACSIMILE TRANSMISSION:
(For confirmation only)
(800) 568-3476
FOR INFORMATION CALL:
(800) 568-3476
------------------
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery or any other tender offer
materials may be obtained from the Information Agent. You may also contact your
broker, dealer, bank, trust company or other nominee for assistance concerning
the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
Call Collect: (212) 929-5500
or
Toll-Free: (800) 322-2885
Email: proxy@mackenziepartners.com
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 646-4543