EXHIBIT 99.(a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
PrimeSource Corporation
at
$10.00 Net Per Share
by
FPF Acquisition Corp.
an indirect wholly-owned subsidiary of
Fuji Photo Film U.S.A., Inc.
The Offer and Withdrawal Rights will expire at
12:00 midnight, New York City time,
on Tuesday, October 9, 2001, unless the Offer is extended.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of September 4, 2001 (the "Merger Agreement"), among Fuji Photo Film U.S.A.,
Inc. ("Fuji"), Enovation Graphic Systems, Inc. ("Enovation"), a wholly-owned
subsidiary of Fuji, FPF Acquisition Corp. ("Purchaser"), a wholly-owned
subsidiary of Enovation, and PrimeSource Corporation (the "Company"). The Board
of Directors of the Company has determined that the Offer and the Merger are
fair to and in the best interests of the Company's shareholders and recommends
that the Company's shareholders tender their shares in the Offer.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
shares of common stock of PrimeSource that represents, together with any shares
beneficially owned by Fuji or Purchaser, at least 80% of the then outstanding
shares of common stock of the Company and (2) the expiration or termination of
the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976. The Offer is also subject to other conditions. See "The Offer--
Conditions to the Offer."
------------------------
IMPORTANT
If you are a shareholder of the Company and wish to tender your shares in the
Offer, you must (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver the Letter of Transmittal and all other required documents to
the Depositary (as defined herein) together with certificates representing the
shares tendered or follow the procedure for book-entry transfer set forth in
"The Offer--Procedures for Accepting the Offer and Tendering Shares," or (2)
request your broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for you. If your shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee, you must
contact that person if you wish to tender your shares.
If you wish to tender your shares and cannot deliver certificates
representing your shares and all other required documents to the Depositary on
or prior to the Expiration Date (as defined herein) or you cannot comply with
the procedures for book-entry transfer on a timely basis, you may tender your
shares pursuant to the guaranteed delivery procedure set forth in "The
Offer--Procedures for Accepting the Offer and Tendering Shares."
Questions and requests for assistance may be directed to D.F. King & Co.,
Inc. (the "Information Agent") or Bear, Stearns & Co. Inc. (the "Dealer
Manager") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
other related materials may be obtained from the Information Agent or the
Dealer Manager. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for copies of these documents.
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
September 11, 2001
TABLE OF CONTENTS
Page
----
SUMMARY TERM SHEET ...................................................... 1
INTRODUCTION ............................................................ 4
THE OFFER ............................................................... 5
Terms of the Offer..................................................... 5
Acceptance for Payment and Payment for Shares.......................... 7
Procedures for Accepting the Offer and Tendering Shares................ 8
Withdrawal Rights...................................................... 11
Certain United States Federal Income Tax Consequences.................. 11
Price Range of Shares; Dividends....................................... 13
Certain Information Concerning the Company............................. 13
Certain Effects of the Offer........................................... 15
Certain Information Concerning the Fuji Companies...................... 16
Source and Amount of Funds............................................. 17
Background of the Offer................................................ 17
Purpose and Structure of the Offer and the Merger...................... 20
Plans for the Company.................................................. 20
The Merger Agreement................................................... 21
Dissenters Rights...................................................... 28
Confidentiality Agreement.............................................. 28
Employment Agreement................................................... 29
Conditions to the Offer................................................ 29
Certain Legal Matters; Regulatory Approvals............................ 30
Fees and Expenses...................................................... 33
Miscellaneous.......................................................... 34
SCHEDULE I Directors and Executive Officers of the Fuji Companies ....... I-1
SUMMARY TERM SHEET
Fuji Photo Film U.S.A., Inc., through its indirect wholly-owned subsidiary,
FPF Acquisition Corp., is offering to purchase all of the outstanding common
stock of PrimeSource Corporation for $10.00 per share in cash. The following are
some of the questions you, as a shareholder of PrimeSource, may have and the
answers to those questions. We urge you to carefully read the remainder of this
Offer to Purchase and the accompanying Letter of Transmittal because the
information in this summary is not complete and additional important information
is contained in the remainder of this Offer to Purchase and the Letter of
Transmittal.
Who is offering to buy my securities?
We are Fuji Photo Film U.S.A., Inc., a New York corporation, and through our
indirect wholly-owned subsidiary, FPF Acquisition Corp., a Pennsylvania
corporation, we are offering to purchase all of the outstanding common stock
of PrimeSource. FPF Acquisition was formed for the purpose of making this
tender offer and engaging in the subsequent merger with PrimeSource and is a
wholly-owned subsidiary of Enovation Graphic Systems, Inc., or Enovation, a
Delaware corporation, which was recently formed to serve as a holding company
for subsidiaries engaged in the distribution of graphic arts and printing
systems products, including such products manufactured by us and our
affiliates. We, Enovation and FPF Acquisition are each wholly-owned
subsidiaries of FUJIFILM America, Inc., or Fuji America, a Delaware
corporation, which is the principal United States holding company for the
various U.S. operating subsidiaries of Fuji Photo Film Co., Ltd., or Fuji
Japan, a publicly-owned Japanese corporation. See "Introduction" and "The
Offer--Certain Information Concerning the Fuji Companies."
What are the classes and amounts of securities sought in the offer?
We are seeking to purchase all of the outstanding shares of common stock of
PrimeSource. See "Introduction" and "The Offer--Terms of the Offer."
How much are you offering to pay for my securities and what is the form of
payment? Will I have to pay any fees or commissions?
We are offering to pay the price of $10.00 per share, net to you, in cash,
without interest. If you tender your shares to us in the offer, you will not
have to pay brokerage fees, commissions 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 "The Offer--Terms of the Offer."
Do you have the financial resources to make payment?
Fuji Japan plans to use its and its subsidiaries' available cash and cash
equivalents to provide FPF Acquisition with sufficient funds to purchase shares
tendered to us in the offer and to complete the merger which is expected to
follow the successful completion of the offer. The offer is not conditioned upon
any financing arrangements. See "The Offer--Source and Amount of Funds."
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:
o the form of payment consists solely of cash,
o the offer is not conditioned on our ability to obtain financing, and
o if we consummate the offer, we will acquire all remaining shares for the
same cash price in the merger.
See "The Offer--Certain Information Concerning the Fuji Companies" and "The
Offer--Source and Amount of Funds."
How long do I have to decide whether to tender in the offer?
You will have at least until 12:00 midnight, New York City time, on Tuesday,
October 9, 2001, to decide whether to tender your shares in the offer, unless we
decide to extend the offer. Further, if you are unable to deliver the required
documents in order to make a valid tender by that time, you may be able to use
the guaranteed delivery procedure described in this Offer to Purchase. See "The
Offer--Terms of the Offer--Expiration Date" and "The Offer--Procedures for
Accepting the Offer and Tendering Shares."
What are the most significant conditions to the offer?
We are not obligated to purchase any shares in the offer unless:
o the number of shares tendered in the offer, when added to any shares then
owned by us, Enovation or FPF Acquisition, represents at least 80% of the
shares of common stock of PrimeSource outstanding on the expiration date of
the offer. We calculate the minimum number of shares to be approximately
5,086,245 assuming none of the outstanding employee stock options are
exercised. There are presently outstanding options to purchase an aggregate
of 486,621 shares with exercise prices less than $10.00 per share. If all
of such options are exercised, the minimum number of shares would be
approximately 5,475,542; and
o the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, has expired or been terminated.
The offer is also subject to a number of other conditions. See "The
Offer--Conditions to the Offer."
How do I tender my shares?
If you are a record holder, you may tender your shares by delivering the
certificates representing your shares, together with a completed Letter of
Transmittal, to American Stock Transfer & Trust Company, the depositary for the
offer, not later than the time the offer expires. If your shares are held in
street name, you must instruct your nominee to tender the shares. If you are
unable to deliver the required documents to the depositary by the expiration of
the offer, you may get some extra time to do so by having a broker, a bank or
other fiduciary which 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 Nasdaq National Market trading days. For
the tender offer to be valid, however, the depositary must receive the missing
items within that three day period. See "The Offer--Procedures for Accepting the
Offer and Tendering Shares."
How do I withdraw previously tendered shares?
To withdraw shares, you must deliver a properly executed 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 "The
Offer--Withdrawal Rights."
Until what time can I withdraw previously tendered shares?
You can withdraw shares at any time until the offer has expired. See "The
Offer--Withdrawal Rights."
Is there an agreement governing the offer?
Yes. We, Enovation, FPF Acquisition and PrimeSource have entered into a
merger agreement dated as of September 4, 2001. The merger agreement provides,
among other things, for the terms and conditions of the offer and the merger of
FPF Acquisition into PrimeSource following the offer. See "The Offer--The Merger
Agreement."
What does the board of directors of PrimeSource think of the offer?
The board of directors of PrimeSource has unanimously determined that the
offer and the merger are fair to and in the best interests of the shareholders
of PrimeSource, and recommends that PrimeSource shareholders tender their shares
in the offer. See "Introduction."
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If a majority of the shares are tendered and accepted for payment, will
PrimeSource continue as a public company?
No. Following the purchase of the shares in the offer, we expect to
consummate the merger. If the merger takes place, PrimeSource will be privately
owned. Even if the merger does not take place, if we purchase all the tendered
shares, there may be so few remaining shareholders and publicly held shares that
PrimeSource's common stock will no longer be eligible to be traded through the
Nasdaq National Market, there may not be a public trading market for
PrimeSource's stock, and PrimeSource may cease making filings with the
Securities and Exchange Commission or otherwise cease being required to comply
with the rules of the Securities and Exchange Commission relating to publicly
held companies. See "The Offer--Certain Effects of the Offer."
Will the offer be followed by a merger if all PrimeSource shares are not
tendered in the offer?
Yes. If the offer is consummated, we, Enovation and PrimeSource plan to
merge FPF Acquisition into PrimeSource. The merger is subject to conditions,
including:
o if required, PrimeSource shareholders shall have approved the merger;
o no court or governmental entity shall have enacted or entered any statute,
rule, regulation, judgment, decree, injunction or other order which is in
effect and prohibits or makes the merger illegal; and
o the receipt of regulatory approvals, including the expiration or
termination of the waiting period under the HSR Act.
See "The Offer--Certain Effects of the Offer," "The Offer--Purpose and
Structure of the Offer," "The Offer--Plans for the Company" and "The Offer--The
Merger Agreement."
If I decide not to tender, how will the offer affect my shares?
If the merger described above takes place, shareholders who have not tendered
in the offer and do not exercise dissenters rights will receive the same amount
of cash per share that they would have received had they tendered their shares
in the offer. Therefore, if the merger takes place, the only difference to you
between tendering your shares and not tendering your shares is that if you
tender your shares into the offer, you will be paid earlier and will not have
dissenters rights. However, even if the merger does not take place, the number
of shareholders and shares of PrimeSource that are still in the hands of the
public may be so small that there no longer will be an active public trading
market or, possibly, any public trading market, for PrimeSource's common stock.
Also, as described above, PrimeSource may cease making filings with the
Securities and Exchange Commission or may no longer be required to comply with
the rules of the Securities and Exchange Commission relating to publicly held
companies. See "The Offer--Certain Effects of the Offer."
What is the market value of my shares as of a recent date?
On August 30, 2001, the last full trading day before PrimeSource announced
that it was engaged in negotiations to be acquired by us at a cash price of
$10.00 per share of PrimeSource common stock, the last sale price of
PrimeSource's common stock reported on the Nasdaq National Market was $5.60 per
share. On September 10, 2001, the last full trading day before the date of this
offer to purchase, the last sale price of PrimeSource's common stock was $9.92
per share. We advise you to obtain a recent quotation for shares of
PrimeSource's common stock in deciding whether to tender your shares. See "The
Offer--Price Range of Shares; Dividends."
Who can I talk to if I have questions about the offer?
You can call either the Information Agent, D.F. King & Co., Inc., at (800)
207-3158 (toll free) or the Dealer Manager, Bear, Stearns & Co. Inc., at (877)
652-6039 (toll free) with any questions you may have.
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To the Holders of Shares of Common Stock of PrimeSource Corporation:
INTRODUCTION
FPF Acquisition Corp. ("Purchaser"), a Pennsylvania corporation and a
wholly-owned subsidiary of Enovation Graphic Systems, Inc., a Delaware
corporation ("Enovation"), which is a wholly-owned subsidiary of Fuji Photo Film
U.S.A., Inc., a New York corporation ("Fuji"), hereby offers to purchase all of
the outstanding shares of common stock, par value $0.01 per share, of
PrimeSource Corporation, a Pennsylvania corporation (the "Company"), and the
associated rights to purchase shares (the "Rights") issued pursuant to the
Rights Agreement between the Company and American Stock Transfer & Trust
Company, as Rights Agent, dated as of February 1, 2001, as amended (together,
the "Shares"), of the Company at a price of $10.00 per Share, net to the seller
in cash and without interest thereon (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
thereto, collectively constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger dated as
of September 4, 2001 (the "Merger Agreement") among Fuji, Enovation, Purchaser
and the Company. The Merger Agreement provides that, following completion of the
Offer and the satisfaction or waiver of certain conditions in the Merger
Agreement, Purchaser will be merged into the Company (the "Merger") with the
Company continuing as the surviving corporation (the "Surviving Corporation"),
which will be wholly-owned by Enovation. At the effective time of the Merger
(the "Effective Time"), each Share outstanding immediately prior to the
Effective Time (other than Shares held by the Company as treasury stock or owned
beneficially by Fuji, Enovation or Purchaser or any of Fuji's other
subsidiaries, all of which will be cancelled, and other than Shares that are
held by shareholders, if any, who properly exercise their dissenters rights
under the Pennsylvania Business Corporation Law (the "PBCL")), will be converted
into the right to receive the per Share price paid in the Offer, in cash,
without interest (the "Merger Consideration"). The Merger Agreement is more
fully described in "The Offer--The Merger Agreement," which also contains a
discussion of the treatment of stock options.
Tendering shareholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the purchase
of Shares by Purchaser pursuant to the Offer. Shareholders who hold their Shares
through a broker or bank should consult such institution as to whether it
charges any service fees. Fuji, Enovation or Purchaser will pay all charges and
expenses of Bear, Stearns & Co. Inc. as dealer manager ("Bear Stearns" or the
"Dealer Manager"), American Stock Transfer & Trust Company, as depositary (the
"Depositary"), and D.F. King & Co., Inc., as information agent (the "Information
Agent"), incurred in connection with the Offer.
The Board of Directors of the Company (the "Company Board") has unanimously
determined that the Offer and the Merger are fair to and in the best interests
of the shareholders of the Company and recommends that the Company's
shareholders tender their Shares in the Offer.
Berwind Financial, L.P. ("Berwind Financial"), the Company's financial
advisor, has delivered to the Company Board its written opinion dated September
4, 2001, to the effect that, as of such date and based on and subject to the
matters stated in such opinion, the consideration to be received by holders of
Shares in the Offer and the Merger pursuant to the Merger Agreement are fair
from a financial point of view to such holders. The full text of Berwind
Financial's written opinion, which describes the assumptions made, procedures
followed, matters considered and limitations on the review undertaken, is
included as Annex A to the Company's Solicitation/ Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to shareholders
concurrently herewith. Shareholders are urged to read the full text of such
opinion carefully in its entirety.
The Company has been advised that all of its directors and executive officers
intend to tender all of their Shares pursuant to the Offer.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares that, together with any Shares then beneficially owned by
4
Fuji, Enovation or Purchaser, represents at least 80% of the Shares outstanding
on the Expiration Date of the Offer (the "Minimum Condition"). The Offer is also
conditioned upon the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and the
satisfaction of certain other conditions. See "The Offer--Conditions to the
Offer."
The Company has advised Fuji that, on August 31, 2001, 6,357,806 Shares were
issued and outstanding and 486,621 Shares were subject to issuance upon the
exercise of options having exercise prices less than $10.00 per share. Assuming
that none of such options are exercised prior to the expiration of the Offer,
the Minimum Condition would be satisfied if approximately 5,086,245 Shares (80%
of the outstanding Shares as of August 31, 2001) were validly tendered and not
withdrawn prior to the expiration of the Offer. If all of such options are
exercised prior to the expiration of the Offer, Purchaser believes that the
Minimum Condition would be satisfied if approximately 5,475,542 Shares were
validly tendered and not withdrawn prior to the expiration of the Offer.
The Merger Agreement provides that upon acceptance for payment of a number of
Shares that satisfies the Minimum Condition, Fuji will be entitled to designate
up to such number of directors, rounded up to the next whole number, on the
Company Board that equals the product of (1) the total number of directors on
the Company Board and (2) the percentage that the number of Shares beneficially
owned by Purchaser bears to the total number of Shares then outstanding. The
Company has agreed to use its best efforts to cause at least three members of
the Company Board who were directors as of the date of the Merger Agreement to
remain directors of the Company until the Effective Time. See "The Offer--The
Merger Agreement."
The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval of the Merger Agreement by the Company's
shareholders. If the Minimum Condition is satisfied, Purchaser would have
sufficient voting power to approve the Merger without the affirmative vote of
any other shareholder of the Company. The Company has agreed, if required by
applicable law, to cause a meeting of its shareholders to be held as promptly as
practicable following consummation of the Offer for the purposes of considering
and taking action upon the approval and adoption of the Merger Agreement. Fuji,
Enovation and Purchaser have agreed to vote their Shares in favor of the
approval and adoption of the Merger Agreement. See "The Offer--The Merger
Agreement."
This Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
THE OFFER
Terms of the Offer
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not properly withdrawn as permitted
under "The Offer--Withdrawal Rights." The term "Expiration Date" means 12:00
midnight, New York City time, on Tuesday, October 9, 2001, unless Purchaser
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire.
Subject to the provisions of the Merger Agreement, Purchaser expressly
reserves the right in its sole discretion to waive any or all of the conditions
to its obligation to purchase Shares pursuant to the Offer, to increase the
price per Share payable in the Offer, to extend the Offer and to make any other
changes in the terms and conditions of the Offer, except that Purchaser will not
without the prior written consent of the Company (1) decrease the price per
Share payable in the Offer, (2) decrease the maximum number of Shares to be
purchased in the Offer, (3) except as required by law, impose conditions to the
Offer in addition to the conditions set forth in "The Offer--Conditions to the
Offer," (4) except as required by law, change the conditions to the Offer in any
material respect adverse to the Company, (5) except as required by law, amend
any other term of the Offer in a manner adverse to the holders of Shares or (6)
change the form of consideration to be paid pursuant to the Offer.
5
Purchaser agrees that (a) it shall not terminate or withdraw the Offer or
extend the Expiration Date of the Offer unless at the Expiration Date of the
Offer, the conditions to the Offer set forth in "The Offer--Conditions to the
Offer" shall not have been satisfied or earlier waived and (b) if the conditions
to the Offer are not satisfied on any scheduled or extended Expiration Date of
the Offer, then if all such conditions are reasonably capable of being satisfied
prior to November 30, 2001, Purchaser shall, unless otherwise agreed by the
Company, extend the Offer from time to time (each such individual extension not
to exceed ten business days from the previously scheduled expiration date) until
such conditions are satisfied or waived; provided, however, that Purchaser shall
not be required to extend the Offer beyond November 30, 2001.
The Purchaser may, without the consent of the Company, and expressly reserves
the right (but shall not be obligated) to (a) extend the Offer, and thereby
delay acceptance for payment of, and the payment for, any Shares, if at the
Expiration Date any of the conditions to the Purchaser's obligation to purchase
Shares are not satisfied or waived, and (b) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission ("SEC") or the staff thereof applicable to the Offer or
any period required by applicable law; provided, however, the Offer may not be
extended beyond November 30, 2001 without the consent of the Company; provided,
further, however, Purchaser may include a Subsequent Offering Period in the
Offer as discussed below.
If by the Expiration Date, any of or all 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 SEC, 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) 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 above, 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 above, to amend the
Offer, in each case by giving oral or written notice of such extension,
termination, waiver or amendment to the Depositary and by making a public
announcement thereof. If Purchaser accepts for payment any Shares pursuant to
the Offer, it will accept for payment all Shares validly tendered prior to the
Expiration Date and not properly withdrawn, and will promptly pay for all Shares
so accepted for payment.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, such announcement in the
case of an extension to 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
Securities Exchange Act of 1934 (the "Exchange Act"). Subject to applicable law
(including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require
that material changes be promptly disseminated to shareholders in a manner
reasonably designed to inform them of such changes) and without limiting the
manner in which Purchaser may choose to make any public announcement, Purchaser
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release to the Dow Jones News
Service.
If Purchaser is delayed in its acceptance for payment of or payment for
Shares or it is unable to pay for Shares pursuant to the Offer for any reason,
then, without prejudice to Purchaser's rights under the Offer, the Depositary
may retain tendered Shares on behalf of Purchaser, and such Shares may not be
withdrawn except to the extent tendering shareholders are entitled to withdrawal
rights as described herein under "The Offer--Withdrawal Rights." However, the
ability of Purchaser to delay the payment for Shares that Purchaser has accepted
for payment 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 the termination or withdrawal of
such bidder's offer.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, 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. If Purchaser changes the price to be paid or the number of Shares
to be purchased in the Offer, the Offer must remain open until the tenth
business day from the date that notice of such change is first published, sent
or
6
given to shareholders. The minimum period during which an offer must remain open
following material changes in the terms of the offer, other than a change in
price, percentage of securities sought or inclusion of or changes to a dealer's
soliciting fee, will depend upon the facts and circumstances, including the
materiality, of the changes. In the SEC's view, an offer should remain open for
a minimum of five business days from the date the material change is first
published, sent or given to shareholders and, if material changes are made with
respect to information that approaches the significance of price and share
levels, a minimum of 10 business days may be required to allow for adequate
dissemination to shareholders.
Pursuant to Rule 14d-11 under the Exchange Act, although the Purchaser does
not currently intend to do so, the Purchaser may, subject to certain conditions,
elect to provide a subsequent offering period of from three business days to 20
business days in length 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"). A Subsequent Offering Period would be an
additional period of time, following the expiration of the Offer and the
purchase of Shares in the Offer, during which shareholders may tender Shares not
tendered in the Offer. A Subsequent Offering Period, if one is included, is not
an extension of the Offer, which already will have been completed.
During a Subsequent Offering Period, tendering shareholders will not have
withdrawal rights and the Purchaser will promptly purchase and pay for any
Shares tendered at the same price paid in the Offer. Rule 14d-11 provides that
the Purchaser may provide a Subsequent Offering Period so long as, among other
things, (1) the initial 20-business day period of the Offer has expired, (2) the
Purchaser offers the same form and amount of consideration for Shares in the
Subsequent Offering Period as in the initial Offer, (3) the Purchaser
immediately accepts and promptly pays for all securities tendered during the
Offer prior to its expiration, (4) the Purchaser announces the results of the
Offer, including the approximate number and percentage of Shares deposited in
the Offer, no later than 9:00 a.m., Eastern time, on the next business day after
the Expiration Date and immediately begins the Subsequent Offering Period and
(5) the Purchaser immediately accepts and promptly pays for Shares as they are
tendered during the Subsequent Offering Period. The Merger Agreement provides
that Purchaser may elect to extend the Offer to include a Subsequent Offering
Period not to exceed 20 business days following the expiration of the Offer if
it satisfies the conditions above. In a public release, the SEC has expressed
the view that the inclusion of a Subsequent Offering Period would constitute a
material change to the terms of the Offer requiring the Purchaser to disseminate
new information to shareholders in a manner reasonably calculated to inform them
of such change sufficiently in advance of the Expiration Date (generally five
business days). In the event the Purchaser elects to include a Subsequent
Offering Period, it will notify shareholders of the Company consistent with the
requirements of the SEC.
The Purchaser does not currently intend to include a Subsequent Offering
Period in the Offer, although it reserves the right to do so in its sole
discretion. 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, if one is included.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
Acceptance for Payment and Payment for Shares
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) and the satisfaction or earlier waiver of all the conditions to the
Offer set forth in "The Offer--Conditions to the Offer," Purchaser will accept
for payment and will pay for all Shares validly tendered prior to the Expiration
Date and not properly withdrawn
7
pursuant to the Offer as soon as it is permitted to do so under applicable law.
Subject to the Merger Agreement and compliance with Rule 14e-1(c) under the
Exchange Act, Purchaser expressly reserves the right to delay payment for Shares
in order to comply in whole or in part with any applicable law. See "The
Offer--Certain Legal Matters; Regulatory Approvals."
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) the certificates
evidencing such Shares (the "Share Certificates") or confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in "The Offer--Procedures for Accepting the
Offer and Tendering Shares," (2) the Letter of Transmittal (or a 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 (as
defined below) in lieu of the Letter of Transmittal and (3) any other documents
required by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. 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
Offer Price therefor with the Depositary, which will act as agent for tendering
shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. If, for any reason whatsoever, acceptance for payment of
any Shares tendered pursuant to the Offer is delayed, or Purchaser is unable to
accept for payment Shares tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights under "The Offer--Terms of the Offer," the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn, except to the extent that the tendering
shareholders are entitled to withdrawal rights as described in "The
Offer--Withdrawal Rights" and as otherwise required by Rule 14e-1(c) under the
Exchange Act.
Under no circumstances will interest on the Offer Price for Shares be paid,
regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
shareholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in "The Offer--Procedures for Accepting the Offer and
Tendering Shares," such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of Fuji's affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such
transaction or assignment will not relieve Fuji, Enovation or Purchaser of their
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.
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.
Procedures for Accepting the Offer and Tendering Shares
Valid Tenders. In order for a shareholder validly to tender Shares pursuant
to the Offer, either (1) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together 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 any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase and either the Share Certificates
evidencing tendered Shares must be received by the Depositary at such address or
such Shares must be tendered pursuant to the procedure for book-entry transfer
described below and a Book-Entry
8
Confirmation must be received by the Depositary, in each case prior to the
Expiration Date, or (2) the tendering shareholder must comply with the
guaranteed delivery procedures described below.
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, that 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 are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
Book-Entry Transfer. The Depositary will establish an account with respect to
the Shares at 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 in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
either the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering shareholder must comply with the guaranteed
delivery procedure described below.
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.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of Transmittal is signed by the registered holder
of the Shares tendered therewith, unless such holder has completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (2) if the Shares are
tendered for the account of a firm that is participating in the Security
Transfer Agents Medallion Program (an "Eligible Institution"). In all other
cases, all signatures on a Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share
Certificate is registered in the name of a person or persons other than the
signer of the Letter of Transmittal, or if payment is to be made or delivered
to, or a Share Certificate not accepted for payment or not tendered is to be
issued in the name of, a person other than the registered holder(s), then the
Share Certificate must be endorsed or accompanied by appropriate duly executed
stock powers, in either case signed exactly as the name(s) of the registered
holder(s) appear on the Share Certificate, with the signature(s) on such Share
Certificate or stock powers guaranteed by an Eligible Institution as provided in
the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such shareholder's Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered; provided that all of the following conditions are satisfied:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and
(3) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a 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), and
any other documents required by the Letter of Transmittal are received
by the Depositary within three Nasdaq National Market trading days
after the date of execution of such Notice of Guaranteed Delivery.
9
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the form of Notice of
Guaranteed Delivery made available by Purchaser.
In all cases, Shares will not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) (or,
in the case of a book-entry transfer, an Agent's Message in lieu of the Letter
of Transmittal) is received by the Depositary.
The method of delivery of Share Certificates, the Letter of Transmittal and
all other required documents, including delivery through the Book-Entry Transfer
Facility, is at the option and risk of the tendering shareholder, and the
delivery will be deemed made only when actually received by the Depositary
(including, in the case of a book-entry transfer, receipt of a 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.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. 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 and irregularities have been cured or waived to
the satisfaction of Purchaser. None of Purchaser, the Dealer Manager, the
Depositary, the Information Agent 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. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted for
payment by Purchaser (including, with respect to any and all other Shares or
other securities issued or issuable in respect of such Shares on or after the
date of this Offer to Purchase). All such proxies shall be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, Purchaser accepts such Shares for payment.
Upon such acceptance for payment, all prior proxies given by such shareholder
with respect to such Shares (and such other Shares and securities) will be
revoked without further action, and no subsequent proxies may be given nor any
subsequent written consent executed by such shareholder (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of Purchaser will, with respect to the Shares (and other securities)
for which the appointment is effective, be empowered to exercise all voting and
other rights of such shareholder as they in their sole discretion may deem
proper at any annual or special meeting of the Company's shareholders or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's payment for
such Shares, Purchaser must be able to exercise full voting rights with respect
to such Shares.
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the Offer, as well as
the tendering shareholder's representation and warranty that such shareholder
has the full power and authority to tender and assign the Shares tendered, as
specified in the Letter of Transmittal. Purchaser's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering shareholder and Purchaser upon the terms and subject to
the conditions of the Offer.
To prevent backup federal income tax withholding with respect to payment to
shareholders of the purchase price of Shares purchased pursuant to the Offer,
each United States holder must provide the Depositary with such shareholder's
correct taxpayer identification number or social security number or certify that
such shareholder is not subject to backup withholding by completing the
substitute Form
10
W-9 in the Letter of Transmittal. If backup withholding applies to a
shareholder, the Depositary is required to withhold 30.5% of any payments made
to such shareholder during the 2001 calendar year and 30% of any payments made
during the 2002 calendar year. See Instruction 8 of the Letter of Transmittal.
If a shareholder is a nonresident alien or foreign entity not subject to backup
withholding, the shareholder is urged to give the Depositary a completed W-8BEN
(Certificate of Foreign Status) prior to receipt of payment.
Withdrawal Rights
Except as otherwise provided below, tenders of Shares made pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date. Thereafter,
such tenders are irrevocable, except that they may be withdrawn after November
9, 2001 unless theretofore accepted for payment as provided in this Offer to
Purchase.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name and address of the person
who tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder of such Shares, if different from that of
the person who tendered such Shares. If Share Certificates evidencing Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such Share Certificates, the serial
numbers shown on such Share Certificates must be submitted to the Depositary and
the signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in "The Offer--Procedures for Accepting the
Offer and Tendering Shares," 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. Withdrawals of Shares may not be rescinded. Any
Shares properly withdrawn will thereafter be deemed not to have been validly
tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered
at any time prior to the Expiration Date by following one of the procedures
described in "The Offer--Procedures for Accepting the Offer and Tendering
Shares."
If Purchaser is delayed in its acceptance for payment of Shares or is unable
to accept Shares for payment pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering shareholders are
entitled to withdrawal rights as described herein.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
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.
In the event the Purchaser provides a Subsequent Offering Period following
the Offer, no withdrawal rights will apply to Shares tendered during such
Subsequent Offering Period or to Shares tendered in the Offer and accepted for
payment.
Certain United States Federal Income Tax Consequences
This summary of the material United States federal income tax consequences of
the Offer and the Merger is for general information only and is based on the law
as currently in effect. This summary does not discuss all of the tax
consequences that may be relevant to a shareholder in light of its particular
circumstances or to shareholders subject to special rules, such as financial
institutions, broker-dealers, tax-exempt organizations, shareholders that hold
their Shares as part of a straddle or a hedging or conversion transaction and
shareholders who acquired their Shares through the exercise of an employee stock
option or otherwise as compensation.
11
Shareholders are urged to consult their own tax advisors as to the particular
tax consequences to them of the Offer and the Merger, including the effect of
United States state and local tax laws or foreign tax laws.
A United States holder refers to:
o a citizen or resident of the United States,
o a corporation or other entity created or organized in the United States or
under the laws of the United States or of any political subdivision of the
United States, or
o an estate or trust, the income of which is includible in gross income for
federal income tax purposes regardless of its source.
A Non-United States holder refers to a shareholder that is not a United
States holder.
Tender Offer
United States Holders. The receipt by a United States holder of cash for
Shares pursuant to the Offer will be a taxable transaction under the United
States Internal Revenue Code of 1986, as amended (the "Code"). A tendering
United States holder will generally recognize gain or loss in an amount equal to
the difference between the cash received by the shareholder pursuant to the
Offer and the shareholder's adjusted tax basis in the Shares tendered pursuant
to the Offer. That gain or loss will be a capital gain or loss if the Shares are
a capital asset in the hands of the shareholder, and will be long term capital
gain or loss if the Shares have been held for at least one year. Shareholders
are urged to consult their own tax advisors as to the federal income tax
treatment of a capital gain or loss (including limitations on the deductibility
of a capital loss).
A United States holder that tenders Shares may be subject to backup
withholding unless it provides its taxpayer identification number and certifies
that the number is correct or properly certifies that it is awaiting a taxpayer
identification number, or unless an exemption is demonstrated to apply. If
applicable, backup withholding will be imposed at a rate of 30.5% for any
payments made during the calendar year ending December 31, 2001 and at a rate of
30% for any payments made during the 2002 calendar year (with the rate being
further reduced to 28% by the year 2006). See "Procedures for Accepting the
Offer and Tendering Shares--Other Requirements." Backup withholding is not an
additional tax. Amounts so withheld can be refunded or credited against the
federal income tax liability of the shareholder, provided appropriate
information is forwarded to the IRS. A tendering United States holder should
complete the Substitute Form W-9 that is included in the Letter of Transmittal.
Non-United States Holders. A tendering Non-United States holder will
generally not be subject to United States federal income tax on a gain realized
on a disposition of Shares unless:
o the gain is effectively connected with a trade or business in the United
States of that Non-United States holder,
o that Non-United States holder is a non-resident alien individual who holds
the Shares as a capital asset and who is present in the United States for
183 or more days during the taxable year in which the disposition occurs,
or
o that Non-United States holder is subject to tax under the provisions of the
Code on the taxation of United States expatriates.
Information reporting and backup withholding imposed at the rates described
above under "United States Holders" may apply under specified circumstances to
cash payments received by a tendering Non-United States Holder unless it
certifies as to its foreign status or otherwise establishes an exemption. See
"The Offer--Procedures for Accepting the Offer and Tendering Shares--Other
Requirements." Backup withholding is not an additional tax. Amounts so withheld
can be refunded or credited against the federal income tax liability of a
Non-United States holder, provided appropriate information is forwarded to the
IRS. To avoid backup withholding, a tendering Non-United States holder should
complete a Form W-8BEN, which may be obtained from the Depositary.
12
Merger
The receipt by a United States holder or Non-United States holder of cash
pursuant to the Merger would generally result in federal income tax consequences
similar to those described in the relevant portion of the above summary.
Shareholders that receive cash pursuant to the Merger are urged to consult their
own tax advisors.
Price Range of Shares; Dividends
The Shares are authorized for quotation on the Nasdaq National Market under
the symbol "PSRC." The following table sets forth, for the periods indicated,
the high and low sales prices per Share and the amount of cash dividends paid
per Share for the periods indicated. Share prices are as reported on the Nasdaq
National Market based on published financial sources.
Common Stock
High Low Cash Dividends
------ ----- --------------
1999:
First Quarter.................................................. $ 7.06 $5.25 $ .045
Second Quarter ................................................ $ 8.12 $4.84 $ .045
Third Quarter.................................................. $ 8.00 $4.50 $ .045
Fourth Quarter................................................. $ 6.50 $4.00 $ .045
2000:
First Quarter.................................................. $ 6.84 $5.00 $.0475
Second Quarter................................................. $ 5.62 $4.81 $.0475
Third Quarter.................................................. $ 5.87 $4.00 $.0475
Fourth Quarter................................................. $ 5.25 $4.06 $.0475
2001:
First Quarter.................................................. $ 5.38 $3.56 $.0475
Second Quarter................................................. $ 4.40 $3.75 $.0475
Third Quarter (through September 10, 2001)..................... $10.10 $3.95 $.0475
On August 30, 2001, the last full trading day before the Company announced
that it was engaged in negotiations to be acquired by Fuji at a cash price of
$10.00 per Share, the last sale price per Share on the Nasdaq National Market
was $5.60. On September 10, 2001, the last full day of trading before the
commencement of the Offer, the last sale price per Share on the Nasdaq National
Market was $9.92 per Share. Shareholders are urged to obtain a current market
quotation for the Shares.
Certain Information Concerning the Company
General. The Company's principal offices are located at 4350 Haddonfield
Road, Suite 222, Pennsauken, New Jersey 08109. The telephone number of the
Company is (856) 488-4888. The Company, a Pennsylvania corporation, was
incorporated in 1954.
The following description of the Company and its business has been taken from
the Company's Form 10-K for the year ended December 31, 2000, and is qualified
in its entirety by reference to such Form 10-K.
The Company is a national distributor of machinery and equipment and
consumable supplies serving the printing and publishing industry. The Company
presently represents over 500 suppliers, provides more than 200,000 line items
and has a customer base in excess of 20,000. The Company offers consumables,
such as films, plates, blankets, papers and chemistries; scanners, servers, work
stations, image setters, computer-to-plate devices and other digital electronic
equipment and the applicable software; and press, bindery and other finishing
machinery.
Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational reporting requirements
of the Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024,
13
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the
public reference facilities may be obtained from the SEC by telephoning
1-800-SEC-0330. The Company's filings are also available to the public on the
SEC's Internet site (http://www.sec.gov). Copies of such materials may also be
obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or is based upon
reports and other documents on file with the SEC or otherwise publicly
available. Although neither Purchaser nor Fuji has any knowledge that would
indicate that any statements contained herein based upon such reports and
documents are untrue, neither Purchaser nor Fuji takes any responsibility for
the accuracy or completeness of the information contained in such reports and
other documents 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 but that are unknown to Purchaser or Fuji.
Certain Projections. The Company does not, as a matter of course, make public
any forecasts as to its future financial performance. However, in connection
with Fuji's review of the transactions contemplated by the Merger Agreement, the
Company provided Fuji with certain projected financial information concerning
the Company. Such information included, among other things, the Company's
projections of total revenues, gross profit, earnings before interest, taxation,
depreciation and amortization ("EBITDA") and net income for the Company for the
years 2001 through 2004. Set forth below is a summary of such projections. These
projections should be read together with the financial statements of the Company
that can be obtained from the SEC as described above.
Year Ended December 31,
------------------------------------------
2001 2002 2003 2004
-------- -------- -------- --------
(in thousands)
Total Revenues..................... $494,363 $504,250 $514,335 $524,665
Gross Profit....................... $ 80,617 $ 82,697 $ 84,351 $ 86,038
EBITDA............................. $ 13,785 $ 16,841 $ 17,617 $ 17,895
Net Income......................... $ 3,005 $ 4,680 $ 5,351 $ 5,851
It is the understanding of Fuji, Enovation and Purchaser that the projections
were not prepared with a view to public disclosure or compliance with published
guidelines of the SEC or the guidelines established by the American Institute of
Certified Public Accountants regarding projections or forecasts and are included
herein only because such information was provided to Fuji, Enovation and
Purchaser in connection with their evaluation of a business combination
transaction. These projections are subject to certain risks and uncertainties
that could cause actual results to differ materially from the projections. The
Company has advised Fuji, Enovation and Purchaser that its internal financial
forecasts (upon which the projections provided to Fuji, Enovation and 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 (not all of which were provided to Fuji, Enovation and
Purchaser), all made by management of the Company, with respect to industry
performance, general business, economic, market and financial conditions and
other matters, 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 Fuji,
Enovation or 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 Fuji, Enovation, 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 Fuji, Enovation, 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
14
event that any or all of the assumptions underlying the projections are shown to
be in error. Fuji, Enovation and Purchaser acknowledge that the Private
Securities Litigation Reform Act of 1995 does not apply to the information set
forth in this Offer to Purchase, including the projections set forth in this
section.
Certain Effects of the Offer
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, which could adversely affect the liquidity and market
value of the remaining Shares held by shareholders other than Purchaser. Neither
Fuji nor the Purchaser can predict whether the reduction in the number of Shares
that might otherwise trade publicly would have an adverse or beneficial effect
on the market price for, or marketability of, the Shares or whether such
reduction would cause future market prices to be greater or less than the Offer
Price.
Stock Quotation. The Shares are authorized for quotation on the Nasdaq
National Market. According to the published guidelines of the Nasdaq National
Market, the Shares might no longer be eligible for quotation on the Nasdaq
National Market if, among other things, either (i) the number of Shares publicly
held were less than 750,000, there were fewer than 400 holders of round lots,
the aggregate market value of publicly-held Shares were less than $5,000,000,
net tangible assets were less than $4,000,000, there were fewer than two
registered and active market makers for the Shares and the minimum bid price was
less than $1 per share, or (ii) the number of Shares publicly held were less
than 1,100,000, there were fewer than 400 holders of round lots, the aggregate
market value of publicly held Shares were less than $15,000,000 and either (x)
the Company's market capitalization was less than $50,000,000 or (y) the total
assets and total revenue of the Company for the most recently completed fiscal
year or two of the last three most recently completed fiscal years were less
than $50,000,000, there were fewer than four registered and active market makers
and the minimum bid price was less than $5 per share. Shares held directly or
indirectly by directors or officers of the Company or beneficial owners of more
than 10% of the Shares are not considered as being publicly held for this
purpose.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges (with trades
published by such exchanges), the Nasdaq Stock Market (with quotations published
in the Nasdaq "additional list" or in one of the "local lists") or in the
over-the-counter market. The extent of the public market for the Shares and the
availability of such quotations would, however, depend upon the number of
shareholders and the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors. According to the Company, as of August 31,
2001, there were 6,357,806 Shares outstanding.
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 the market for the Shares and stock
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.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the SEC if the Shares are neither listed on a national securities
exchange nor held by 300 or more holders of record. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its shareholders and to the SEC 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, 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 and the requirements of Rule 13e-3 under the Exchange Act with
respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted
15
securities" of the Company to dispose of such securities pursuant to Rule 144
promulgated under the Securities may be impaired or eliminated. If registration
of the Shares under the Exchange Act were terminated, the Shares would no longer
be "margin securities." Fuji, Enovation and Purchaser currently intend to seek
to cause the Company to terminate the registration of the Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of registration are met.
Certain Information Concerning the Fuji Companies
Fuji is a New York corporation with its principal offices located at 555
Taxter Road, Elmsford, New York 10523. The telephone number of Fuji is (914)
789-8100. Fuji is the indirect wholly-owned U.S. marketing subsidiary of Fuji
Photo Film Co., Ltd. ("Fuji Japan") and offers a complete portfolio of imaging
and information products, services and e-solutions to retailers, consumers,
professionals and business customers.
Enovation is a Delaware corporation with its principal offices located at 555
Taxter Road, Elmsford, New York 10523, c/o Fuji Photo Film U.S.A., Inc. The
telephone number of Enovation is (914) 789-8100. Enovation is a wholly- owned
subsidiary of Fuji. Enovation was recently formed to serve as a holding company
for subsidiaries engaged in the distribution of graphic arts and printing
systems products, including such products manufactured by Fuji Japan and its
affiliates. To date, it has not carried on any activities other than in
connection with the Merger Agreement and the Offer and in connection with
certain other acquisitions as discussed under "The Offer--Background of the
Offer."
Purchaser is a Pennsylvania corporation with its principal offices located at
555 Taxter Road, Elmsford, New York 10523, c/o Fuji Photo Film U.S.A., Inc. The
telephone number of Purchaser is (914) 789-8100. Purchaser is a wholly- owned
subsidiary of Enovation and an indirect wholly-owned subsidiary of Fuji.
Purchaser was recently formed solely for purposes of making this Offer and
engaging in the Merger and has not carried on any activities other than in
connection with the Merger Agreement and the Offer.
Fuji is a wholly-owned subsidiary of FUJIFILM America, Inc. ("Fuji America").
Fuji America is a Delaware corporation with its principal offices located at 555
Taxter Road, Elmsford, New York 10523. The telephone number of Fuji America is
(914) 789-8100. Fuji America is a wholly-owned subsidiary of Fuji Japan and the
U.S. holding company for companies that are principally engaged in manufacturing
and distribution of imaging and information products, conducting business in the
following segments: Films and Imaging Systems, Digital Imaging Systems, Graphic
Arts and Printing Systems, Medical Imaging and Diagnostic Systems, Recording
Media, Office Imaging Information Systems, and Highly Functional Industrial
Materials.
Fuji Japan is a publicly-owned Japanese corporation with its principal
offices located at 26-30 Nishiazabu 2-Chome, Tokyo, Japan 106-8620. The
telephone number of Fuji Japan is 011-81-33406-2111. It is a manufacturer and
distributor of, and is a holding company for companies that are principally
engaged in manufacturing and distributing, imaging and information products,
conducting businesses in the following segments: Films and Imaging Systems,
Digital Imaging Systems, Graphic Arts and Printing Systems, Medical Imaging and
Diagnostic Systems, Recording Media, Office Imaging Information Systems, and
Highly Functional Industrial Materials. Fuji Japan, Fuji America, Fuji,
Enovation and Purchaser are collectively referred to herein as the "Fuji
Companies" and each individually as a "Fuji Company."
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of the Fuji Companies and certain other
information are set forth in Schedule I hereto.
To the best knowledge of the Fuji Companies, none of the persons listed in
Schedule I to this Offer to Purchase has, during the past five years, (1) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor (2) been a party to any judicial or administrative proceeding
(except for matters that were dismissed without sanction or settlement) that
resulted in a judgment, decree or final order enjoining the person from future
violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws.
16
Except as described in this Offer to Purchase, (1) none of the Fuji Companies
nor, to the best knowledge of the Fuji Companies, any of the persons listed in
Schedule I to this Offer to Purchase or any associate or majority- owned
subsidiary of the Fuji Companies or any of the persons so listed beneficially
owns or has any right to acquire, directly or indirectly, any Shares and (2)
none of the Fuji Companies nor, to the best knowledge of the Fuji Companies, any
of the persons or entities referred to above nor any director, executive officer
or subsidiary of any of the foregoing has effected any transaction in the Shares
during the past 60 days.
Except as provided in the Merger Agreement or as otherwise described in this
Offer to Purchase, none of the Fuji Companies nor, to the best knowledge of the
Fuji Companies, any of the persons listed in Schedule I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of such securities, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans, guarantees against
loss, guarantees of profits, division of profits or loss or the giving or
withholding of proxies.
Except as set forth in this Offer to Purchase, none of the Fuji Companies
nor, to the best knowledge of the Fuji Companies, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the SEC applicable to
the Offer. Except as set forth in this Offer to Purchase, there have been no
contracts, negotiations or transactions between Fuji Japan or any of its
subsidiaries or, to the best knowledge of Fuji Japan, any of the persons listed
in Schedule I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
Source and Amount of Funds
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be approximately
$67.3 million, exclusive of existing indebtedness of the Company. The Offer and
the Merger are not conditioned on obtaining financing. Purchaser plans to obtain
all funds needed for the Offer and the Merger through capital contributions or
loans that will be made by Fuji Japan, indirectly through one or more of its
direct or indirect wholly-owned subsidiaries, to Enovation which, in turn, will
contribute the proceeds of such capital contributions or loans to Purchaser.
Fuji Japan plans to make these contributions or loans by using its and its
subsidiaries' available cash and cash equivalents.
Background of the Offer
For many years, the Company has served as a non-exclusive dealer of Fuji's
Graphic Systems Division to market and sell Fuji's graphic arts and electronic
imaging products. The Company serves as such a dealer pursuant to separate
Dealer Agreements between Fuji and numerous branch offices of the Company, each
of which is assigned a primary area of responsibility. The Dealer Agreements are
generally terminable by the Company on 90 days prior notice and may be
terminated by Fuji if, among other things, the particular branch office of the
Company fails to achieve annual mutually agreed upon purchase targets for Fuji's
products or specified percentages thereof for two successive calendar quarters.
The Company is the Fuji Graphic Systems Division's largest dealer. For the years
1999 and 2000 and the six months ended June 30, 2001, Fuji's revenues from the
Company under the Dealer Agreements totaled approximately $79,517,000,
$87,711,000 and $42,667,000, respectively.
In November 2000, Mr. James F. Mullan, Chief Executive Officer and President
of the Company, discussed with representatives of Fuji the potential benefits of
meeting to discuss industry conditions and the structure of the distribution
channel for pre-press supplies and equipment within the printing and publishing
industries in the United States. A meeting was then scheduled for December 11,
2000 at Fuji's headquarters in Elmsford, New York with Mr. Mullan and Mr. Robert
J. Gourley, the sole stockholder of RJG Holding Company, Inc. ("RJG"), the
parent of Heartland Imaging Companies which is another large Fuji graphic arts
dealer. In advance of the meeting, both the Company and RJG provided certain
financial information to Fuji.
17
At the December 11th meeting, Messrs. Mullan and Gourley met with Messrs.
Stanley E. Freimuth, Executive Vice President and Chief Operating Officer of
Fuji, Samuel C. Monroe, Jr., Director, Business Strategies and Daniel C. Maffeo,
Vice President and General Manager, Graphic Systems Division to discuss
conditions affecting the graphic arts industry generally and to explore
potential options to respond to changes in the industry. At this meeting,
Messrs. Mullan and Gourley asked if Fuji would consider investing in, or
financing the possible combination of, the Company and RJG. Fuji indicated its
willingness to consider such a transaction. At this meeting, a confidentiality
agreement was signed by the parties and, thereafter, the parties exchanged
non-public information.
During the balance of 2000 and the first quarter of 2001, Fuji conducted
preliminary financial analysis based on historical publicly available
information and the non-public information provided by the Company and RJG and
prepared internal financial projections regarding the proposed combination of
the Company and RJG. On January 29, 2001, Mr. Mullan and William A. DeMarco,
Vice President and Chief Financial Officer of the Company met with Mr. Gourley
and Mr. Thomas Prater, RJG's Chief Financial Officer, and Messrs. Freimuth,
Monroe and Maffeo in Elmsford, New York to discuss issues that could arise as a
result of, and the potential operating and financial impact of, a possible
transaction. During the period from late January through mid April 2001, Fuji
from time to time requested, and the Company supplied, additional information
and Messrs. Freimuth and/or Maffeo had several conversations with Mr. Mullan
regarding the status of Fuji's deliberations.
In early April 2001, senior officers of Fuji consulted with its outside legal
advisor to discuss, among other things, the legal and regulatory framework and
potential structures for the acquisition of the Company and RJG by Fuji, and on
April 17, 2001, Fuji engaged Bear Stearns to serve as its financial advisor in
connection with such transactions. Following these consultations, Messrs.
Freimuth and Monroe advised Mr. Mullan that Fuji did not wish to make an
investment in, or finance the combination of, the Company and RJG as previously
discussed, but was considering making a proposal to acquire the Company, and
that Fuji was continuing its internal financial analysis. Mr. Mullan was also
advised that Fuji might seek to acquire RJG and Graphic Systems, Inc., which is
another large Fuji graphic arts dealer, but that any proposal to acquire the
Company would not be contingent on Fuji acquiring either of the other companies.
On May 17, 2001, Messrs. Freimuth, Monroe and Maffeo informed Mr. Mullan by
telephone that Fuji was interested in pursuing a transaction with the Company
and was submitting a proposal to Fuji Japan for approval at the next meeting of
its Board of Directors. Thereafter, Fuji continued to work with Bear Stearns,
its financial advisor, and Stroock & Stroock & Lavan LLP, its outside legal
advisor ("Stroock"), to complete its preliminary financial and legal analysis,
and to develop a proposal for submission to Fuji Japan's Board of Directors.
On June 8, 2001, Mr. Freimuth advised Mr. Mullan by telephone that Fuji Japan
had given preliminary approval for Fuji to proceed with the acquisition of the
Company in a transaction structured as a first-step cash tender offer followed
by a second-step cash merger and recommended that the Company retain a financial
advisor to assist in the negotiation of the purchase price. On June 26, 2001,
Mr. Mullan informed Fuji that the Company had engaged Berwind Financial as its
financial advisor. On June 26, 2001, representatives from Bear Stearns contacted
Berwind Financial by telephone. Berwind Financial advised that it was meeting
with the Company the following day to review discussions between the companies
to date and the Company's business and thereafter would be ready to commence
negotiations. Thereafter, Fuji instructed Stroock to prepare a draft of a merger
agreement and related documents and commence legal due diligence and instructed
its independent auditors to commence due diligence with respect to the Company's
financial statements and accounting records and systems.
On June 27, 2001, Mr. Freimuth met with Mr. Mullan in Edison, New Jersey to
discuss tentatively Mr. Mullan's employment arrangements with Enovation, the
subsidiary of Fuji formed to own the Company and the other acquired dealers, in
the event a transaction with the Company was successfully negotiated and
completed.
On June 28, 2001, representatives of Bear Stearns and Berwind Financial began
discussions by telephone of the terms of a potential transaction, during which
Bear Stearns indicated that Fuji would be prepared to offer to acquire all of
the outstanding Shares at a price of $9.00 per Share payable in cash, contingent
upon satisfaction of financial and legal due diligence. On the morning of July
6, 2001, representatives from Bear
18
Stearns and Berwind Financial met in New York to discuss the proposal. During
such discussions, Berwind Financial stated that $9.00 per Share was unacceptable
and that the Company believed that a higher price was more appropriate given the
Company's operating performance and market position. There was then a general
discussion relating to the purchase price, after which Bear Stearns stated that
they would discuss valuation with Fuji and would respond promptly. That
afternoon, representatives from Bear Stearns and Fuji discussed the meeting with
Berwind Financial held earlier that day. Following subsequent internal
consultations at Fuji, Fuji instructed Bear Stearns to notify Berwind Financial
that it was prepared to increase its proposal to $65 million, or approximately
$10.00 per Share.
On July 9, 2001, Berwind Financial responded to the proposal indicating that
the Company would be willing to discuss a transaction valued at $71 million, or
approximately $10.80 per Share. After further negotiations, the parties agreed
in principle to a price of $69 million, or approximately $10.53 per Share (after
taking into account the cost of cancellation of outstanding stock options),
contingent upon satisfactory due diligence, the negotiation of a mutually
acceptable definitive merger agreement and approvals by the respective Boards of
Directors, and Fuji instructed legal counsel to negotiate definitive agreements
with Stradley, Ronon, Stevens & Young, LLP, special counsel for the Company.
Thereafter, during July and early August 2001, Fuji's executives and its legal
and accounting advisors conducted a due diligence review of the Company, and the
companies' respective legal counsel negotiated successive drafts of the merger
agreement.
On August 9, 2001, representatives of Fuji met with Mr. Mullan to discuss Mr.
Mullan's employment arrangements with Enovation and to address the provisions in
the draft merger agreement relating to employee benefit matters. The principal
terms of Mr. Mullan's employment agreement with Enovation were agreed to,
subject to negotiation of a mutually acceptable definitive employment agreement,
the negotiation of which continued until late August. Also in mid-August, Mr.
Mullan and the Fuji representatives agreed that, subject to the consummation of
the proposed transaction, the Company's employment agreements with Messrs.
Mullan, Demarco, Donald James Purcell and Edward W. Padley should be canceled.
On August 14, 2001, Fuji completed an internal review of the financial due
diligence that had been conducted by its outside auditors and concluded that,
among other things, there were questions regarding the Company's financial
reserves for the Company's 74% owned joint venture, Canopy, LLC ("Canopy"),
which had been formed in the second half of 2000 with Xeikon America, Inc., the
owner of the remaining 26% interest in Canopy, to market and service Xeikon
digital printing systems in the United States and Canada. Later that day, Mr.
Maffeo spoke with Mr. Mullan and advised him of the results of Fuji's financial
review and outlined a number of specific concerns. Mr. Mullan responded that
Fuji's concerns regarding Canopy and other matters required further explanation
and clarification.
On August 15, 2001, senior Fuji executives participated in a conference
telephone call with Mr. DeMarco to discuss further the concerns raised as a
result of Fuji's due diligence review. Among the matters discussed by Mr.
DeMarco was the basis for and adequacy of the Canopy inventory and receivables
reserves and the potential costs associated with the proposals for unwinding
Canopy which the Company and Xeikon were negotiating. Later in the day on August
15, Mr. Freimuth telephoned Mr. Mullan and informed him that prior to the
conference call earlier that day with Mr. DeMarco, Fuji was planning to request
a purchase price reduction of more than $10 million, but that, as a result of
the clarifications and explanations provided by the Company on these issues,
Fuji proposed that the purchase price be reduced by $3.64 million to $65.36
million for the equity of the Company, or $10.00 per Share. Mr. Mullan said he
would consider this proposal.
On August 17, 2001, at Mr. Mullan's suggestion, Bear Stearns discussed Fuji's
August 15th price proposal with Berwind Financial. Thereafter, the proposal was
considered by the Company Board at a meeting held on August 21, 2001 at which
representatives of Berwind Financial and the Company's outside legal counsel
participated. At such meeting, the Company Board authorized management to
continue negotiating with Fuji.
19
Thereafter, between August 21 and September 4, 2001, such issues were
negotiated by Fuji and the Company and their respective legal counsel and
successive drafts of the merger agreement were prepared and negotiated. After
the close of the trading on the Nasdaq National Market on August 30, 2001,
counsel for the Company and Fuji discussed the day's trading activity for the
Company's common stock, including the significant increase in price and above
average volume and concluded that the issuance of a press release by the Company
regarding the negotiations with Fuji would be appropriate. On the morning of
August 31, 2001, prior to the opening of trading, counsel for Fuji confirmed
that the Board of Directors of Fuji Japan had approved the transaction, and the
Company thereupon issued a press release announcing that it was engaged in
negotiations to be acquired by Fuji in a transaction that would pay each of its
shareholders $10.00 per Share in cash.
On September 4, 2001, the Company Board met with its financial and legal
advisors and reviewed the terms of the Merger Agreement, including the Offer and
the Merger, and received the opinion of Berwind Financial to the effect that the
consideration to be received by the holders of Shares pursuant to the Offer and
the Merger is fair to the holders of Shares from a financial point of view. At
such meeting, the Company Board unanimously determined that the Merger Agreement
and the transactions contemplated thereby, including the Offer and the Merger,
are in the best interests of the Company, unanimously approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and recommended that the shareholders of the Company accept the Offer
and approve and adopt the Merger Agreement and the consummation of the Merger,
if shareholder approval is required by applicable law in order to consummate the
Merger. Thereafter, the parties signed the Merger Agreement, Mr. Mullan signed
his employment agreement with Enovation and Fuji and the Company issued a joint
press release announcing the signing of the definitive Merger Agreement. On
September 4, 2001, Fuji also announced the signing of definitive agreements to
acquire RJG and Graphic Systems, Inc.
On September 11, 2001, pursuant to the terms of the Merger Agreement,
Purchaser commenced the Offer.
Purpose and Structure of the Offer and the Merger
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The purpose of the Merger is to acquire all
outstanding Shares not tendered and purchased pursuant to the Offer. If the
Offer is successful, Fuji, Enovation and Purchaser intend to consummate the
Merger as promptly as practicable.
Depending upon the number of Shares purchased by Purchaser pursuant to the
Offer or otherwise, the Company Board may be required to submit the Merger
Agreement to the Company's shareholders for approval at a shareholders' meeting
convened for that purpose in accordance with the PBCL. If shareholder approval
is required, the Merger Agreement and the Merger must be adopted by a majority
of all votes cast by all shareholders entitled to vote thereon at a meeting at
which a quorum is present. Pursuant to the Merger Agreement, Parent, Enovation
and Purchaser have agreed to vote all Shares beneficially owned by them in favor
of approval and adoption of the Merger Agreement and the Merger at any such
shareholders' meeting.
If the Minimum Condition is satisfied, the Merger may be consummated without
a shareholder meeting and without the approval of the Company's shareholders.
Under the PBCL, holders of Shares do not have dissenters rights in the Offer
but will have dissenters rights in the Merger.
Plans for the Company
Pursuant to the terms of the Merger Agreement, Fuji currently intends,
promptly after consummation of the Offer, to exercise its right under the Merger
Agreement to appoint a number of directors to the Company Board in proportion to
its share ownership. Purchaser currently intends, as soon as practicable after
consummation of the Offer, to consummate the Merger.
Except as otherwise provided herein, it is expected that, initially following
the Merger, the business and operations of the Company will be continued
substantially as they are currently being conducted. Fuji will continue to
evaluate the business and operations of the Company during the pendency of the
Offer and after
20
the consummation of the Offer and the Merger and will take such actions as it
deems appropriate under the circumstances then existing. Fuji intends to seek
additional information about the Company during this period.
Fuji's principal reason for acquiring the Company, as well as RJG and Graphic
Systems, Inc., is to maintain and improve Fuji's competitive position in the
graphic products industry and strengthen the distribution channel for the
graphic products industry by creating a new value-added and efficient national
distribution system to provide a complete array of products from a wide range of
manufacturers, with substantial inventory and full technical service and support
all backed by a financially stable global company such as Fuji Japan. Fuji
intends to continue to review the Company and its assets, corporate structure,
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.
The Merger Agreement
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Tender Offer Statement
on Schedule TO filed by the Fuji Companies under the Exchange Act (the "Schedule
TO"). The summary is qualified in its entirety by reference to the complete text
of the Merger Agreement.
The Offer
The Merger Agreement provides for the making of the Offer. The obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer is subject to the satisfaction or waiver of the Minimum Condition and
certain other conditions that are described in "The Offer--Conditions to the
Offer." Pursuant to the Merger Agreement, Purchaser may waive any condition to
the Offer or change any of the terms or conditions of the Offer, except that,
without the prior written consent of the Company, Purchaser may not make any
change in the Offer which decreases the price per Share or the number of Shares
sought in the Offer, which, except as required by law, imposes conditions to the
Offer in addition to those set forth in "The Offer--Conditions to the Offer,"
changes the conditions to the Offer in any material respect adverse to the
Company or amends any other term of the Offer in a manner adverse to the holders
of the Shares or which changes the form of consideration to be paid pursuant to
the Offer.
The Merger Agreement provides that promptly upon the purchase of and payment
for Shares pursuant to the Offer, Fuji shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Company Board
that equals the product of (1) the total number of directors on the Company
Board and (2) the percentage that the number of Shares beneficially owned by
Fuji bears to the total number of Shares then outstanding. To this end, the
Company will take all necessary action to cause Fuji's designees to be elected
or appointed to the Company's Board. However, the Company shall use its best
efforts to ensure that at least three members of the Company's Board who are
directors as of the date of the Merger Agreement shall remain directors until
the Effective Time.
Following the election of Fuji's designees to the Company Board, any
termination, amendment or waiver of the Merger Agreement by the Company will
require the approval of a majority of the directors of the Company then in
office who are not designees of Fuji, provided that if there shall be no such
directors, such actions may be effected by a majority vote of the entire Board
of Directors of the Company.
The Merger
The Merger Agreement provides that as soon as practicable after the
satisfaction or waiver of each of the conditions to the Merger, Purchaser will
be merged into the Company with the Company being the surviving corporation (the
"Surviving Corporation"), unless Fuji elects to structure the Merger so that the
Company shall be merged with and into Purchaser.
If required by the PBCL, the Company will call and hold a meeting of its
shareholders (the "Company Shareholder Meeting") promptly following consummation
of the Offer for the purpose of voting upon the approval and adoption of the
Merger Agreement and the Merger. At any such meeting all Shares then owned
21
by Fuji, Enovation or Purchaser or any subsidiary of Fuji will be voted in favor
of approval and adoption of the Merger Agreement and the Merger.
Pursuant to the Merger Agreement, each Share outstanding at the Effective
Time (other than Shares held by the Company as treasury stock or Shares owned
beneficially by Fuji, Enovation or Purchaser or any of Fuji's subsidiaries, all
of which will be cancelled, and other than Shares that are held by shareholders,
if any, who properly exercise their dissenters rights under the PBCL) will be
converted into the right to receive the Merger Consideration. Shareholders who
perfect their dissenters rights under the PBCL will be entitled to the amounts
determined pursuant to such proceedings. See "The Offer--Dissenters Rights."
Stock Options
Immediately prior to the Effective Time, other than with respect to certain
persons subject to Section 16(b) of the Exchange Act, the Company will pay each
holder of a then outstanding stock option to purchase Shares granted under any
stock option or compensation plan or arrangement of the Company, whether or not
then exercisable or vested, in cancellation or settlement thereof, for each
Share subject to such option, an amount in cash equal to the excess, if any, of
the Merger Consideration over the per share exercise price thereof.
Representations and Warranties
Pursuant to the Merger Agreement, the Company has made customary
representations and warranties to Fuji, Enovation and Purchaser, including
representations relating to corporate existence and power; corporate
authorizations; government authorizations; consents; capitalization; SEC
filings; financial statements; absence of undisclosed material liabilities;
absence of certain changes (including any material adverse effect on the
Company); litigation; taxes; employee matters; financial advisors' fees;
environmental matters; intellectual property; insurance; compliance with laws;
contracts; transactions with affiliates; state takeover laws; rights plan; and
other matters.
Certain of the representations and warranties are qualified as to
"materiality" or "material adverse effect." For these purposes, "material
adverse effect" means a material adverse change in the business, operations,
assets or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, or Fuji and its subsidiaries, taken as a whole,
as the case may be; provided, however, that (i) any adverse effect that is
caused by conditions affecting the economy or security markets generally shall
not be taken into account in determining whether there has been a material
adverse effect, (ii) any adverse effect that is caused by conditions affecting
the primary industry in which the Company or Fuji, as the case may be, currently
competes which does not have a materially disproportionate effect on the Company
or Fuji, as the case may be, shall not be taken into account in determining
whether there has been a material adverse effect and (iii) any adverse effect
that results from the announcement of the transactions contemplated by the
Merger Agreement shall not be taken into account in determining whether there
has been a material adverse effect.
Pursuant to the Merger Agreement, Fuji, Enovation and Purchaser have made
customary representations and warranties to the Company, including
representations relating to their corporate existence and power; corporate
authorizations; financing and other matters.
Covenants
The Merger Agreement contains various covenants of the parties thereto.
Company Conduct of Business Covenants. Prior to the Effective Time and except
as may be agreed in writing by Fuji or as expressly permitted by the Merger
Agreement, the Company and its subsidiaries will conduct their business in the
ordinary course consistent with past practices and shall use their best efforts
to preserve intact their business organizations, present lines of business and
relationships with customers, suppliers and others having business dealings with
them to the end that their ongoing businesses shall not be impaired in any
material respect at the Effective Time and to keep available the services of
their present officers and employees, and the Company will not and will not
permit its subsidiaries to, among other things:
o pay dividends in excess of $0.0475 per share per quarter;
22
o issue additional shares of capital stock or rights to acquire capital stock
or amend the terms of any existing equity securities except for Shares that
may be issued pursuant to the exercise of stock options;
o amend its organizational documents;
o make material acquisitions or dispositions or enter into any new material
lines of business;
o make changes in its capital structure;
o incur additional indebtedness or make capital expenditures other than in
the ordinary course of business consistent with past practice;
o amend its employee benefit or compensation plans except as may be
required by law;
o enter into or amend certain material contracts; or
o take any action that would cause a representation or warranty to be untrue
in any respect.
Shareholder Meeting. Unless the PBCL does not require a vote of shareholders,
the Company will cause the Company Shareholder Meeting to be duly called and
held as soon as reasonably practicable after consummation of the Offer for the
purpose of voting on the approval and adoption of the Merger Agreement and the
Merger. In connection with such meeting, the Company will use its best efforts
to obtain the necessary approvals by its shareholders of the Merger Agreement
and the Merger and otherwise comply with all legal requirements applicable to
such meeting.
No Solicitation. The Company will not directly or indirectly (1) initiate,
solicit or encourage (including by way of furnishing information or assistance),
or take any other action to facilitate, any inquiries or the making of any
proposal or offer that constitutes, or may reasonably be expected to lead to,
any Acquisition Proposal (as defined below), or (2) have any discussions with or
provide any confidential information or data to any person relating to an
Acquisition Proposal, or engage in any negotiations concerning an Acquisition
Proposal, or knowingly facilitate any effort or attempt to make or implement an
Acquisition Proposal, and the Company will not permit any of its Subsidiaries to
take, and will prohibit the officers, directors, employees, advisors,
representatives, agents and affiliates of the Company or any of its Subsidiaries
from taking, any such action.
However, the Merger Agreement does not prohibit the Company Board from:
o furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes a written, bona fide Acquisition
Proposal that was not solicited after the date of the Merger Agreement if,
and only to the extent that, (1) the Company Board, after consultation with
independent legal counsel and after consultation with Berwind Financial or
other nationally recognized investment banking firm, determines in good
faith by majority vote that (a) such Acquisition Proposal would, if
consummated, constitute a Superior Proposal (as defined below), and (b)
there is a reasonable probability that the failure to take such action
would be inconsistent with the directors' fiduciary duties under applicable
law and (2) prior to taking such action, the Company (a) provides prior
notice to Fuji to the effect that it is taking such action and complies
with the succeeding sentence and (b) receives from such person or entity an
executed confidentiality agreement in reasonably customary form. The
Company shall promptly (and in any event within one business day, and prior
to taking any of the foregoing actions) advise Fuji following the receipt
by it of any Acquisition Proposal or any inquiry or request relating
thereto and the substance thereof (including the identity of the person
making such Acquisition Proposal, a description of all material terms
thereof and a copy of any written proposal), and advise Fuji of any
developments with respect to such Acquisition Proposal, inquiry or request
promptly upon the occurrence thereof, including the Company's entering into
discussions or negotiations with respect thereto. The Company Board shall
not, in connection with any of the actions described above, take any action
to cause any state takeover statute or other similar state law to become
applicable to the Offer or the Merger or inapplicable to any Acquisition
Proposal (until such time as this Agreement has been terminated in
accordance the provisions described under "The Offer--The Merger
Agreement--Termination"). The Company has agreed immediately to cease and
cause to be terminated any activities, discussions or negotiations
conducted prior to the date of the
23
Merger Agreement with any parties other than Fuji and its affiliates with
respect to any of the foregoing;
o failing to make or reaffirm, withdrawing, adversely modifying or taking a
public position materially inconsistent with its recommendation to its
shareholders described under "Introduction" (which may include making any
statement required by Rule 14e-2 under the Exchange Act) if there exists an
Acquisition Proposal and the Company Board, after consultation with
independent legal counsel and after consultation with Berwind Financial or
other nationally recognized investment banking firm, determines in good
faith by majority vote that (1) such Acquisition Proposal would, if
consummated, constitute a Superior Proposal, and (2) there is a reasonable
probability that the failure to take such action would be inconsistent with
the directors' fiduciary duties under applicable law; or
o making a "stop-look-and-listen" communication with respect to an
Acquisition Proposal, of the nature contemplated in, and otherwise in
compliance with, Rule 14d-9 under the Exchange Act as a result of receiving
an Acquisition Proposal.
"Acquisition Proposal" means any of the following (other than the transaction
among the Company, Fuji, Enovation and Purchaser contemplated by the Merger
Agreement) involving the Company or any of its Subsidiaries: (1) any proposed
merger, consolidation, share exchange, division, recapitalization, business
combination or other similar transaction; (2) any proposed sale, lease,
exchange, mortgage, pledge, transfer or other disposition of assets that
comprise more than 15% (computed based on the fair market value of such assets
as determined by the Company Board in good faith) of the assets of the Company
and its Subsidiaries, on a consolidated basis, in a single transaction or series
of transactions other than a disposition by the Company of its equity ownership
interest in Canopy, LLC; (3) any proposed tender offer, exchange offer or other
equity investment for more than 15% of the outstanding shares of any class of
capital stock of the Company or the filing of a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") in connection
therewith; or (4) any public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
Recommendations. Except as set forth below, the Company Board will not (1)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal or (2) approve or recommend, or propose to approve or
recommend, or execute or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or other
similar agreement or propose publicly or agree to do any of the foregoing
related to any Acquisition Proposal. However, if the Company Board, after
consultation with independent legal counsel, determines in good faith that there
is a reasonable probability that the failure to take such action would be
inconsistent with its fiduciary duties under applicable law, the Company Board
may approve or recommend a Superior Proposal or cause the Company to enter into
an agreement with respect to a Superior Proposal, but in each case only if:
o the Company provides written notice to Fuji three business days prior to
the time it intends to cause the Company to enter into such an agreement
advising Fuji that the Company Board has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the Person making such Superior Proposal,
o at the end of such three business day period, the Company Board continues
to believe that such Acquisition Proposal constitutes a Superior Proposal,
including taking into account any adjustment to the terms and conditions of
the transaction contemplated by the Merger Agreement proposed by Fuji in
response to such Acquisition Proposal and
o the Company terminates this Agreement in accordance with the requirements
of paragraph (g) under "The Offer--The Merger Agreement--Termination" prior
to taking any of the foregoing actions.
A "Superior Proposal" means any bona fide Acquisition Proposal not directly
or indirectly initiated, solicited, encouraged or knowingly facilitated by the
Company after the date of the Merger Agreement which the Company Board
determines in its good faith judgment (based on the advice of Berwind Financial
or other investment banker of nationally recognized reputation), taking into
account all legal, financial, regulatory and other aspects of the proposal and
the person making the proposal, (1) would, if consummated, result in a
transaction that is more favorable to the Company's shareholders (in their
capacity as shareholders), from a financial point of view, than the transaction
contemplated by the Merger Agreement and (2) is reasonably
24
capable of being completed; provided that for purposes of this definition, the
term "Acquisition Proposal" shall have the meaning described above except that
each reference to 15% in the definition of "Acquisition Proposal" shall be
deemed to be a reference to 80% and "Acquisition Proposal" shall only be deemed
to refer to a transaction involving the Company or, with respect to assets
(including the shares of any subsidiary of the Company), the assets of the
Company and its Subsidiaries taken as a whole (and not any of its Subsidiaries
alone).
Employee Benefits. Fuji will review the existing employee benefit plans of
the Company and, in deciding whether to amend or terminate any plans, will
consider the general welfare of the Company's employees; provided that Fuji and
the Surviving Corporation shall each have the right, in its sole discretion, to
amend or terminate any of the Company's plans in accordance with law.
Fuji will, and will cause the Surviving Corporation to, take into account
prior service rendered by employees of the Company prior to the Effective Time
for vesting and eligibility purposes under all employee benefit plans of Fuji
and the Surviving Corporation to the same extent as such service was taken into
account under the corresponding plans of the Company for those purposes,
provided that there shall be no duplication of any benefits. Employees of the
Company will not be subject to any preexisting condition limitation under any
health plan of Fuji or the Surviving Corporation for any condition for which
they would have been entitled to coverage under the corresponding plan of the
Company in which they participated prior to the Effective Time.
In addition, Fuji will cause the Surviving Corporation to apply the lesser of
(i) all reserves and accruals for post-retirement medical benefits established
by the Company on its books in the normal course as of the consummation of the
Offer or (ii) the FASB liability for such benefits to provide post-retirement
medical benefits to current retirees (and their eligible beneficiaries)
receiving benefits and to current employees (and their eligible beneficiaries)
eligible for future benefits upon such terms as the Surviving Corporation may
determine. No employees of the Company hired after September 2, 1994 are
eligible for these post-retirement medical benefits.
Director and Officer Liability. After the Effective Time, Fuji will, and will
cause the Surviving Corporation to, indemnify, to the fullest extent permitted
by the PBCL and the Company's articles of incorporation and by-laws, the present
and former officers and directors of the Company in respect of any losses,
claims, damages, liabilities and expenses (including reasonable fees and
expenses of legal counsel) arising out of actions or omissions occurring at or
prior to the Effective Time, including the transactions contemplated by the
Merger Agreement.
For a period of not less than six years after the Effective Time, Fuji will
cause to be maintained in effect the current officers' and directors' liability
insurance maintained by the Company on the date of the Merger Agreement
(provided that Fuji may substitute therefor policies with reputable and
financially sound carriers having at least the same coverage and amounts, and
containing terms and conditions which are no less advantageous to the persons
currently covered by such policies as the insured) with respect to facts or
circumstances occurring at or prior to the Effective Time to the extent that
such liability insurance can be maintained annually at a cost to Fuji not
greater than 150% of the current annual premium.
Fuji shall reimburse all expenses, including reasonable attorney's fees,
incurred by any person in successfully enforcing the obligations of Fuji and the
Surviving Corporation under these provisions.
Rights Agreement. The Board of Directors of the Company shall take all action
to the extent necessary (including amending the Rights Agreement) in order to
render the Rights inapplicable to the Merger, the Offer and the other
transactions contemplated by the Merger Agreement. Except in connection with the
foregoing sentence, the Board of Directors of the Company shall not, without the
prior written consent of Fuji, except in connection with a Superior Proposal
which the Board of Directors of the Company approves and recommends as provided
in "The Offer--The Merger Agreement--Recommendations" above, (i) amend the
Rights Agreement or (ii) take any action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the Rights,
in each case in order to facilitate any Acquisition Proposal with respect to the
Company.
Takeover Statutes. If any "fair price," "moratorium," "control share
acquisition" or other form of anti-takeover statute or regulation shall become
applicable to the transactions contemplated by the Merger
25
Agreement, including any such provision of the PBCL, the parties shall grant
such approvals and take such actions as are reasonably necessary so that the
transactions contemplated by the Merger Agreement may be consummated as promptly
as practicable on the terms contemplated by the Merger Agreement and otherwise
to act to eliminate or minimize the effects of such statute or regulation on the
transactions contemplated by the Merger Agreement.
Reasonable Best Efforts. Each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by the Merger Agreement, including
using reasonable efforts, including pursuit of legal appeals with respect to any
temporary restraining order, preliminary injunction or other similar judicial
order, to have any judgment, decree, injunction or order lifted, released or
reversed which is in effect and prohibits or makes illegal consummation of the
transactions contemplated by the Merger Agreement.
Conditions to the Merger
The Merger Agreement provides that the obligations of Fuji, Enovation,
Purchaser and the Company to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) if required under the PBCL, the shareholders of the Company shall have
approved and adopted the Merger Agreement by the requisite affirmative
vote in accordance with applicable law;
(b) no court or governmental entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
or makes illegal consummation of the transactions contemplated by the
Merger Agreement;
(c) (1) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated and (2) the Company, Fuji
and Purchaser shall have timely filed with and obtained from each
governmental entity any other filings, notices, approvals, waivers and
consents necessary for the consummation of the Merger, the Offer and
the transactions contemplated by the Merger Agreement, except for
those the failure of which to make or obtain would not have a material
adverse effect on the Company or Fuji; and
(d) Purchaser shall have purchased Shares pursuant to the Offer sufficient
to satisfy the Minimum Condition.
Termination
The Merger Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time (notwithstanding any approval of the Merger
Agreement by the shareholders of the Company):
(a) by mutual written consent duly authorized by the Board of Directors
of the Company and Fuji;
(b) by either the Company or Fuji, if, without any material breach by such
terminating party of its obligations under the Merger Agreement
causing or resulting in such delay, the purchase of Shares pursuant to
the Offer shall not have occurred on or before November 30, 2001;
provided that Fuji may extend such date for 45 calendar days if Fuji
is then actively negotiating with the Department of Justice or the
Federal Trade Commission regarding satisfaction of the conditions set
forth in paragraphs(s) (b) and/or (c)(i) under "The Offer--Conditions
to the Offer" and certifies to the Company that, to its knowledge, all
other conditions to the Offer are satisfied or capable of prompt
satisfaction as of the date of such verification; but, provided,
further, such certification shall be without prejudice to the
requirement that such conditions remain satisfied;
(c) by Fuji or the Company, if the Offer expires or is terminated or
withdrawn pursuant to its terms without any Shares being purchased;
provided that Fuji may not terminate the Merger Agreement pursuant to
this clause, if Fuji's termination of, or Purchaser's failure to
accept for payment or pay for any Shares tendered pursuant to, the
Offer is in violation of the terms of the Offer or the Merger
Agreement;
26
(d) by Fuji or the Company, if any governmental entity of competent
jurisdiction shall have (1) issued a final and nonappealable order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the purchase of Shares pursuant to
the Offer or the Merger or (2) failed to issue an order, decree or
ruling or to take any other action which is necessary to fulfill the
conditions to the Merger set forth under "The Offer--Conditions to the
Offer" and "The Offer--The Merger Agreement--Conditions to the
Merger," and such denial of a request to issue such order, decree or
ruling or to take such other action shall have become final and
nonappealable; provided that the party seeking to terminate the Merger
Agreement shall have complied with its obligations under the Merger
Agreement to use its reasonable best efforts to attempt to remove or
lift, or to obtain, as applicable, such order, decree, ruling or other
action;
(e) by the Company, if the Offer has not been timely commenced, unless the
failure to commence the Offer shall be due to the failure of the
Company to perform in any material respect any of its obligations
under the Merger Agreement then required to be performed;
(f) by Fuji prior to consummation of the Offer, if the Company Board shall
have (1) withdrawn, modified or changed its recommendation or approval
in respect of the Merger Agreement or the Offer in a manner adverse to
Fuji, (2) approved or recommended any proposal other than by Fuji,
Enovation or Purchaser in respect of an Acquisition Proposal, (3) (A)
failed to include in the proxy statement the recommendation referred
to in clause (1) or (B) materially breached its obligations under the
Merger Agreement by reason of a failure to call the Company
Shareholder Meeting in accordance with any of the provisions described
under "The Offer--The Merger Agreement--The Merger," or (4) resolved
to do any of the foregoing;
(g) by the Company prior to consummation of the Offer, if (1) the Company
Board shall have determined that an Acquisition Proposal constitutes a
Superior Proposal and the Company shall have delivered to Fuji the
notice in accordance with the requirements of, and shall have
otherwise complied with the provisions described above under "The
Offer--The Merger Agreement--Recommendations," (2) Fuji does not
make, within three business days after receipt of the Company's
written notice pursuant to clause (1) above, an offer that the Company
Board shall have reasonably concluded in good faith (following
consultation with its financial advisor and outside counsel) is as
favorable to the shareholders of the Company as such Superior
Proposal, (3) the Company shall have delivered to Fuji a written
notice of the determination by the Company Board to terminate the
Merger Agreement pursuant to this clause (g), and (4) simultaneously
with such termination, the Company shall enter into a definitive
acquisition, merger or similar agreement to effect such Acquisition
Proposal and shall make payment of the full amount of the termination
fee to Fuji required by, and confirms in writing its obligation to
reimburse Fuji for its expenses in accordance with, the provisions
described below under "The Offer--The Merger Agreement--Fees and
Expenses; Termination Fee;" or
(h) prior to the consummation of the Offer, by the Company or Fuji
(provided that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained
herein), if there shall have been a material breach of any of the
covenants or agreements or any of the representations or warranties
set forth in the Merger Agreement on the part of the other party,
which breach is not cured within ten business days following written
notice given by the terminating party to the party committing such
breach, or which breach, by its nature, cannot be cured prior to the
date on which the Offer expires.
The party desiring to terminate the Merger Agreement shall give written
notice of such termination to the other party.
Fees and Expenses; Termination Fee
Except as otherwise specified below, all fees and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such expenses.
If (1) Fuji terminates this Agreement pursuant to paragraph (f) under "The
Offer--The Merger Agreement--Termination," (2) the Company terminates this
Agreement pursuant to paragraph (g) under "The
27
Offer--The Merger Agreement--Termination," or (3) (A) Fuji or the Company
terminates this Agreement pursuant to paragraph (b) or paragraph (c) under "The
Offer--The Merger Agreement--Termination" as a result of failure to meet the
Minimum Condition or Fuji terminates this Agreement pursuant to paragraph (h)
under "The Offer--The Merger Agreement--Termination," and (B) at any time prior
to such termination an Acquisition Proposal shall have been publicly disclosed
or publicly proposed, in the case of a termination pursuant to paragraph (c), or
communicated to the Company, or its senior management, Board of Directors or
stockholders in the case of a termination pursuant to paragraph (g) under "The
Offer--The Merger Agreement--Termination," and (C) within 12 months after such
termination the Company or any of its Subsidiaries enters into an agreement with
respect to, or consummates, a transaction contemplated by such Acquisition
Proposal or a Superior Proposal (whether or not such Superior Proposal was
publicly disclosed, publicly proposed or otherwise communicated to the Company
prior to such termination), then in each case the Company will pay to Fuji,
simultaneously with the earlier of entry into any agreement for or the
consummation of such transaction in the case of clause (3) above, a fee, in cash
of $3,000,000 (a "Termination Fee"); provided that the Company in no event shall
be obligated to pay more than one such fee with respect to all such terminations
and transactions.
If (a) Fuji shall become entitled to receive the Termination Fee provided for
above by reason of the occurrence of any of the events described in clauses (1),
(2) or (3) thereof, the Company shall also reimburse Fuji for all documented
expenses, not to exceed $2,000,000, incurred by or on behalf of Fuji in
connection with the transactions contemplated by the Merger Agreement.
Amendment
At any time prior to the Effective Time, the Merger Agreement may be amended
or supplemented in writing if such amendment or supplement is approved by the
respective boards of directors of the Company and Purchaser; provided, however,
that following any approval by the shareholders of the Company, there shall be
no amendment or change to the provisions hereof which (i) by law or in
accordance with the rules of any relevant stock exchange or NASDAQ requires
further approval by such shareholders without such further approval or (ii) is
not permitted under applicable law. Subject to applicable law, any provision of
the Merger Agreement may be waived prior to the Effective Time if, and only if,
such waiver is in writing and signed by the party against whom the waiver is to
be effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Dissenters Rights
If the Merger is consummated, shareholders of the Company may have the right
to dissent from the Merger and to obtain payment of the fair value of their
Shares under the PBCL. Under the PBCL, dissenting shareholders who comply with
the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares and to receive payment of such
fair value in cash plus interest. "Fair value," as used in the PBCL, means the
fair value of Shares immediately before the Effective Time of the Merger, taking
into account all relevant factors, but excluding any appreciation or
depreciation in anticipation of the Merger. Shareholders should recognize that
the value so determined could be higher or lower than the price per Share paid
pursuant to the Offer or the consideration per Share to be paid in the Merger.
Moreover, Purchaser may argue in an appraisal proceeding that, for purposes of
such a proceeding, the fair value of the Shares is less than the price paid in
the Offer or the Merger.
Confidentiality Agreement
Pursuant to the Confidentiality Agreement dated as of December 11, 2000,
Fuji, Heartland and the Company agreed to furnish each other, and to keep
confidential, certain information concerning their respective businesses and
future business relationship. The Merger Agreement provides that certain
information exchanged pursuant to the Merger Agreement will be subject to the
Confidentiality Agreement.
28
Employment Agreement
On September 4, 2001, Enovation entered into an employment agreement with
James F. Mullan to serve as President of Enovation through March 31, 2004, with
possible earlier termination as provided therein. The employment relationship
established by the employment agreement shall become effective only upon the
purchase and payment for Shares by Purchaser pursuant to the Offer. The
Employment Agreement provides for (1) a base salary of $275,000 through March
31, 2002 and increasing on April 1, 2002 and 2003 to $285,000 and $295,000,
respectively; (2) an annual incentive bonus equal to the pro-rated portion of
$175,000 for the fiscal year ending March 31, 2002 and which, thereafter, shall
be variable based upon performance criteria to be established in the future, but
ranging from a guaranteed minimum bonus of $95,000 to $190,000 for the fiscal
year ending March 31, 2003 and not to exceed $205,000 for the fiscal year ending
March 31, 2004; and (3) a one-time special bonus after the expiration of the
employment term based upon performance criteria for the fiscal year ending March
31, 2004 to be established in good faith by Mr. Mullan and the Enovation Board
of Directors prior to March 31, 2002. In the event that Mr. Mullan is terminated
by Enovation without cause, Mr. Mullan will be entitled to severance equal to
any remaining base salary through March 31, 2004 payable in accordance with
customary payroll practices, any guaranteed and earned bonus as provided in
clause (2) above and benefits accrued under any benefit plan in which Mr. Mullan
was a participant on the date of termination. The Employment Agreement also
provides that Mr. Mullan will not disclose confidential information of Enovation
or any of its subsidiaries and affiliates and will not compete with, injure or
disparage or solicit any employees of, Enovation or any of its subsidiaries and
affiliates for a period of two years following the period of employment (which
shall include the period, if any, that Enovation is required to make severance
payments to Mr. Mullan).
Conditions to the Offer
The Merger Agreement provides that notwithstanding any other provision of the
Offer or the Merger Agreement, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares tendered and may postpone the
acceptance for payment or, subject to the restriction referred to above, payment
for any Shares tendered, and subject to the provisions of the Merger Agreement,
may amend or terminate the Offer, if:
(a) the Minimum Condition has not been satisfied prior to the time the Offer
will otherwise expire;
(b) any waiting periods under the HSR Act applicable to the purchase of
Shares in the Offer and the Merger shall not have expired or been terminated
prior to the expiration of the Offer; or
(c) at any time on or after the date of the Merger Agreement and prior to the
acceptance for payment of Shares pursuant to the Offer, any of the following
conditions shall have occurred and be continuing:
(i) there shall be threatened by any governmental agency, or
instituted or pending any action or proceeding before any court
or governmental entity, domestic or foreign, (A) challenging or
seeking to make illegal, to delay materially or otherwise to
restrain or prohibit the making of the Offer, the acceptance for
payment of or payment for some of or all the Shares by Purchaser
or the consummation by Purchaser of the Merger, (B) seeking to
restrain or prohibit Fuji's or the Company's ownership or
operation (or that of their respective subsidiaries, the
Company's subsidiaries or affiliates) of all or any material
portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or of Fuji and its subsidiaries,
taken as a whole, (C) seeking to compel Fuji or the Company to
sell or otherwise dispose of, or hold separate (through the
establishment of a trust or otherwise) particular assets or
categories of assets or businesses of any of the Company, Fuji or
any of Fuji's affiliates, (D) seeking to prohibit or to impose
material limitations on the ability of Fuji or any of its
subsidiaries or affiliates effectively to exercise full rights of
ownership of the Shares (including, without limitation, the right
to vote any Shares acquired or owned by Fuji or any of its
subsidiaries or affiliates on all matters properly presented to
the Company's shareholders), or seeking to prohibit Fuji or any
of its subsidiaries from effectively controlling in any material
respect the
29
business and operations of the Company and the Company's
subsidiaries, taken as a whole, (E) seeking to require
divestiture by Fuji or any of its subsidiaries or affiliates of
any Shares or seeking to obtain from the Company, Fuji, Enovation
or Purchaser by reason of any of the transactions contemplated by
the Offer or the Merger Agreement any damages that are material
to the Company and its subsidiaries, taken as a whole, or Fuji
and its subsidiaries, taken as a whole, or (F) that otherwise, in
the reasonable judgment of Fuji, is likely to have a material
adverse effect on the Company and its subsidiaries, taken as a
whole, or Fuji and its subsidiaries, taken as a whole; or
(ii) there shall be any action taken, or any statute, rule,
regulation, injunction, interpretation, judgment, order or decree
proposed, enacted, enforced, promulgated, issued or deemed
applicable to Fuji or any of its subsidiaries or to the Company
or any of its subsidiaries or the Offer or the Merger, by any
court, governmental entity, domestic or foreign, other than the
application of the waiting period provision of the HSR Act to the
Offer or the Merger, that, in the reasonable judgment of Fuji, is
likely, directly or indirectly, to result in any of the
consequences referred to in paragraph (c)(i) above; or
(iii) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the
Merger Agreement, or any of the representations and warranties of
the Company set forth in the Merger Agreement (disregarding all
qualifications as to materiality or material adverse effect)
shall not be true and correct when made or at any time prior to
consummation of the Offer as if made at and as of such time
(except for those representations and warranties that address
matters only as of a particular date which need only be true and
accurate as of such date) except where the failure of such
representations and warranties to be true and correct would not,
individually or in the aggregate, reasonably be expected to have
a material adverse effect on the Company;
(iv) The Rights shall have become exercisable; or
(v) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been terminated with the
consent of the Company;
which, in the reasonable judgment of Fuji in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Fuji, Enovation and
Purchaser and may be asserted by Purchaser regardless of the circumstances
giving rise to such condition or may be waived by Purchaser in whole or in part
at any time and from time to time in its sole discretion. The failure by
Purchaser or any affiliate of Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and 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.
Certain Legal Matters; Regulatory Approvals
General. Purchaser is not aware of any pending legal proceeding relating to
the Offer. Except as described in this section, based on its examination of
publicly available information filed by the Company with the SEC and other
publicly available information concerning the Company, Purchaser is not aware of
any governmental license or regulatory permit that appears to be material to the
Company's business that might be adversely affected by Purchaser's acquisition
of Shares as contemplated herein or of any approval or other action by any
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
Purchaser or Fuji as contemplated herein. Should any such approval or other
action be required, Purchaser currently contemplates that, except as described
below under "The Offer--Certain Legal Matters; Regulatory Approvals--State
Takeover Statutes," such approval or other action will be sought. While
Purchaser does not currently intend to delay acceptance for payment of Shares
tendered pursuant to the Offer pending the outcome of any such matter (except as
described below), 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 if such approvals were not obtained or
30
such other actions were not taken, adverse consequences might not result to the
Company's business, or certain parts of the Company's business might not have to
be disposed of, any of which could cause Purchaser to elect to terminate the
Offer without the purchase of Shares thereunder under certain conditions. See
"The Offer--Conditions to the Offer."
State Takeover Statutes. A number of states have adopted laws that purport,
to varying degrees, to apply to attempts to acquire corporations that are
incorporated in, or that have substantial assets, shareholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws.
In Edgar v. MITE Corp., the Supreme Court of the United States invalidated
on constitutional grounds the Illinois Business Takeover Statute which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court held that the State of Indiana could, as a
matter of corporate law, constitutionally disqualify a potential acquiror from
voting shares of a target corporation without the prior approval of the
remaining shareholders where, among other things, the corporation is
incorporated in, and has a substantial number of shareholders in, the state.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District
Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional
insofar as they apply to corporations incorporated outside Oklahoma in that
they would subject such corporations to inconsistent regulations. Similarly,
in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee
ruled that four Tennessee takeover statutes were unconstitutional as applied
to corporations incorporated outside Tennessee. This decision was affirmed by
the United States Court of Appeals for the Sixth Circuit.
The Company is incorporated under the laws of Pennsylvania. The Pennsylvania
Takeover Disclosure Law ("PTDL") purports to regulate certain attempts to
acquire a corporation which (1) is organized under the laws of Pennsylvania or
(2) has its principal place of business and substantial assets located in
Pennsylvania. In Crane Co. v. Lam, the United States District Court for the
Eastern District of Pennsylvania preliminarily enjoined, on grounds arising
under the United States Constitution, enforcement of at least the portion of the
PTDL involving the pre-offer waiting period thereunder. Section 8(a) of the PTDL
provides an exemption for any offer to purchase securities as to which the board
of directors of the target company recommends acceptance to its shareholders, if
at the time such recommendation is first communicated to shareholders the
offeror files with the Pennsylvania Securities Commission ("PSC") a copy of the
Schedule TO and certain other information and materials, including an
undertaking to notify securityholders of the target company that a notice has
been filed with the PSC which contains substantial additional information about
the offering and which is available for inspection at the PSC's principal office
during business hours. The Company's Board has approved the transactions
contemplated by the Merger Agreement and recommended acceptance of the Offer and
the Merger to the Company's securityholders. While reserving and not waiving its
right to challenge the validity of the PTDL or its applicability to the Offer,
Purchaser is making a Section 8(a) filing with the PSC in order to qualify for
the exemption from the PTDL. Additional information about the Offer has been
filed with the PSC pursuant to the PTDL and is available for inspection at the
PSC's office at Eastgate Office Building, 2nd Floor, 1010 North 7th Street,
Harrisburg, PA 17102-1410 during business hours.
Chapter 25 of the PBCL contains other provisions relating generally to
takeovers and acquisitions of certain publicly owned Pennsylvania corporations
such as the Company that have a class or series of shares entitled to vote
generally in the election of directors registered under the Exchange Act (a
"registered corporation"). The following discussion is a general and highly
abbreviated summary of certain features of Chapter 25, is not intended to be
complete or to address further potentially applicable exceptions or exemptions,
and is qualified in its entirety by reference to the full text of Chapter 25 of
the PBCL. The Company is a registered corporation.
In addition to other provisions not applicable to the Offer or the Merger,
Subchapter 25D of the PBCL includes provisions requiring approval of a merger of
a registered corporation with an "interested shareholder," by the affirmative
vote of the shareholders entitled to cast at least a majority of the votes that
all shareholders other than the interested shareholder are entitled to cast with
respect to the transaction without counting the votes of the interested
shareholder. This disinterested shareholder approval requirement
31
is not applicable to a transaction (1) approved by a majority of disinterested
directors, (2) in which the consideration to be received by shareholders is not
less than the highest amount paid by the interested shareholder in acquiring his
shares, or (3) effected without submitting the merger to a vote of shareholders
as permitted in Section 1924(b)(1)(ii) of the PBCL. The Company has opted out of
Section 2538(a) in its Restated Articles of Incorporation and has represented to
Fuji, Enovation and Purchaser that the disinterested shareholder approval
requirement of Subchapter 25D will not be applicable to the Merger.
Subchapter 25E of the PBCL provides that, in the event that a person (or a
group of related persons, or any other person or group of related persons)
acquires securities representing at least 20% of the voting power of a
registered corporation (a "Control Transaction"), securityholders of the
corporation would have the right to demand "fair value" of such securityholders'
securities and to be paid such fair value upon compliance with the requirements
of Subchapter 25E. Under Subchapter 25E, "fair value" may not be less than the
highest price per share paid by the controlling person or group at any time
during the 90-day period ending on and including the date of the Control
Transaction, plus an increment, if any, representing any value, including,
without limitation, any proportion of value payable for acquisition of control
of the corporation, that may not be reflected in such price. The Company has
opted out of Subchapter 25E in its Restated Articles of Incorporation and has
represented to Fuji, Enovation and Purchaser that Subchapter 25E is not
applicable to the transactions contemplated by the Merger Agreement.
Subchapter 25F of the PBCL prohibits under certain circumstances certain
"business combinations," including mergers and sales or pledges of significant
assets, of a registered corporation with an "interested shareholder" for a
period of five years. An "interested shareholder" includes a shareholder who is
the beneficial owner of 20% of the shares entitled to vote in an election of
directors. At the time of the Merger, Purchaser will be an "interested
shareholder" within the meaning of this Subchapter, because of its acquisition
of Shares in the tender offer. Subchapter 25F provides an exception for a
"business combination" approved by the board of directors prior to the
interested shareholder's share acquisition date, or where the purchase of the
shares by the interested shareholder on the share acquisition date has been
approved by the board of directors prior to the interested shareholder's share
acquisition date. The Company has opted out of Subchapter 25F in its Restated
Articles of Incorporation and represented to Fuji, Enovation and Purchaser that
Subchapter 25F is not applicable to the transactions contemplated by the Merger
Agreement. In addition, on September 4, 2001, the Company's Board approved the
Merger as well as the acquisition of shares in the Offer as contemplated by this
Subchapter.
Subchapter 25G of the PBCL, relating to "control-share acquisitions,"
prevents under certain circumstances the owner of a control-share block of
shares of a registered corporation from voting such shares unless a majority of
both the "disinterested" shares and all voting shares approve such voting
rights. Failure to obtain such approval may result in a forced sale by the
control-share owner of the control-share block to the corporation at a possible
loss. The Company has opted out of Subchapter 25G in its Restated Articles of
Incorporation and has represented to Fuji, Enovation and Purchaser that
Subchapter 25G is not applicable to the transactions contemplated by the Merger
Agreement.
Subchapter 25H of the PBCL, relating to disgorgement by certain controlling
shareholders of a registered corporation following attempts to acquire control,
provides that under certain circumstances any profit realized by a controlling
person from the disposition of shares of the corporation to any person
(including to the corporation under Subchapter 25G or otherwise) will be
recoverable by the corporation. The Company has opted out of Subchapter 25H in
its Restated Articles of Incorporation and has represented to Fuji, Enovation
and Purchaser that Subchapter 25H is not applicable to the transactions
contemplated by the Merger Agreement.
Subchapter 25I of the PBCL entitles "eligible employees" of a registered
corporation to a lump sum payment of severance compensation under certain
circumstances if the employee is terminated, other than for willful misconduct,
within two years after voting rights lost as a result of a control-share
acquisition are restored by a vote of disinterested shareholders ("Control-Share
Approval") or, in the event the termination was accomplished pursuant to an
agreement, arrangement or understanding with the acquiring person, within 90
days prior to Control-Share Approval. Subchapter 25J of the PBCL provides
protection against termination or impairment under certain circumstances of
"covered labor contracts" of a registered corporation as a result of a "business
combination transaction" if the business operation to which the covered labor
contract relates
32
was owned by the registered corporation at the time voting rights are restored
by shareholder vote after a control-share acquisition. Subchapters 25I and 25J
apply only in the event of a "control share acquisition" to which Subchapter 25G
applies. Since the Company has opted out of Subchapter 25G, there can be no
"control share acquisition" to which Subchapter 25G applies, and the Company has
represented to Fuji, Enovation and Purchaser that Subchapters 25I and 25J are
not applicable to the transactions contemplated by the Merger Agreement.
Section 2504 of the PBCL provides that the applicability of Chapter 25 of the
PBCL to a registered corporation having a class or series of shares entitled to
vote generally in the election of directors registered under the Exchange Act or
otherwise satisfying the definition of a registered corporation under Section
2502(l) of the PBCL shall terminate immediately upon the termination of the
status of the corporation as a registered corporation. Purchaser intends to seek
to cause the Company to terminate the registration of the Shares under the
Exchange Act as soon after consummation of the Offer as the requirements for
termination of the registration of the Shares are met.
Purchaser does not believe that the antitakeover laws and regulations of any
state other than the Commonwealth of Pennsylvania will by their terms apply to
the Offer, and, except as set forth above with respect to the PBCL, Purchaser
has not attempted to comply with any state antitakeover statute or regulation.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer and nothing in this Offer to
Purchase or any action taken in connection with the Offer is intended as a
waiver of such right. If it is asserted that any state antitakeover statute is
applicable to the Offer and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or may be delayed in consummating the
Offer. In such case, Purchaser may not be obligated to accept for payment or pay
for any tendered Shares. See "The Offer--Conditions to the Offer."
United States Antitrust Compliance. Under the HSR Act and the rules that have
been promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
Pursuant to the requirements of the HSR Act, Purchaser has filed a
Notification and Report Form with respect to the Offer and Merger with the
Antitrust Division and the FTC on September 7, 2001. As a result, the waiting
period applicable to the purchase of Shares pursuant to the Offer is scheduled
to expire at 11:59 p.m., New York City time, on September 24, 2001. However,
prior to such time, the Antitrust Division or the FTC may extend the waiting
period by requesting additional information or documentary material relevant to
the Offer from Purchaser. If such a request is made, the waiting period will be
extended until 11:59 p.m., New York City time, on the tenth day after
substantial compliance by Purchaser with such request. Thereafter, such waiting
period can be extended only by court order.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer. At any time before or after the consummation of any such
transactions, the Antitrust Division or the FTC could take such action under the
antitrust laws of the United States as it deems necessary or desirable in the
public interest, including seeking to enjoin the purchase of Shares pursuant to
the Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Fuji or the Company. Private parties (including individual
States) may also bring legal actions under the antitrust laws of the United
States. Purchaser does not believe that the consummation of the Offer will
result in a violation of any applicable antitrust laws. However, 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, what the result will be. See "The Offer--
Conditions to the Offer" and "The Offer--The Merger Agreement."
Fees and Expenses
Bear Stearns is acting as the Dealer Manager in connection with the Offer and
is acting also as financial advisor to Fuji in connection with Fuji's proposed
acquisition of the Company. Bear Stearns will receive
33
reasonable and customary compensation for its services relating to the Offer and
to be reimbursed for certain out-of- pocket expenses. Fuji, Enovation and
Purchaser will indemnify Bear Stearns and certain related persons against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws.
Fuji, Enovation and Purchaser have retained D. F. King & Co., Inc. to be the
Information Agent and American Stock Transfer & Trust Company to be the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telecopy, telegraph and personal
interview and may request banks, brokers, dealers and other nominees to
forward materials relating to the Offer to beneficial owners of Shares.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under federal securities laws.
Neither of Fuji nor Purchaser will pay any fees or commissions to any broker
or dealer or to any other person (other than to the Dealer Manager, the
Depositary and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.
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.
No person has been authorized to give any information or to make any
representation on behalf of Fuji, Enovation or Purchaser 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.
The Fuji Companies have filed with the SEC a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under
the Exchange Act, together with exhibits furnishing certain additional
information with respect to the Offer, and may file amendments thereto. In
addition, the Company has filed with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9
under the Exchange Act, setting forth the recommendation of the Company Board
with respect to the Offer and the reasons for such recommendation and furnishing
certain additional related information. A copy of such documents, and any
amendments thereto, may be examined at, and copies may be obtained from, the SEC
(but not the regional offices of the SEC) in the manner set forth under "Certain
Information about the Company" and "Certain Information about the Fuji
Companies."
FPF ACQUISITION CORP.
September 11, 2001
34
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. Directors and Executive Officers of Fuji Photo Film U.S.A., Inc. The
name, business address, current principal occupation or employment and five-
year employment history of each director and executive officer of Fuji Photo
Film U.S.A., Inc. and certain other information are set forth below. None of
the directors and officers of Fuji Photo Film, U.S.A., Inc. listed below has,
during the past five years, (1) been convicted in a criminal proceeding or (2)
been a party to any judicial or administrative proceeding that resulted in a
judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws, or
a finding of any violation of federal or state securities laws. All directors
and officers listed below are citizens of the United States, unless otherwise
indicated. Directors are identified by an asterisk.
Current Principal Occupation or Employment and Period Served in
Name and Business Address Five-Year Employment History Such Office(s)
- ------------------------------- ------------------------------------------------------------- ------------------------------
Yasuo Tanaka(1)* President and Director of Fuji Photo Film U.S.A., Inc. 1998 to date
555 Taxter Road Executive Vice President and Director of Fuji Photo Film 1996 to 1998
Elmsford, New York 10523 U.S.A., Inc.
Executive Vice President and Director of Fuji Photo Film
Co., Ltd.
President and Director of FUJIFILM America, Inc.
President and Director of Enovation Graphic Systems, Inc.
President and Director of FPF Acquisition Corp.
Stanley E. Freimuth* Executive Vice President, Chief Operating Officer and 2000 to date
555 Taxter Road Director of Fuji Photo Film U.S.A., Inc.
Elmsford, New York 10523 President, Graphic Systems Division of Fuji Photo Film 1996 to date
U.S.A., Inc.
Jonathan E. File Vice President, General Counsel and Secretary of Fuji Photo 1996 to date
555 Taxter Road Film U.S.A., Inc.
Elmsford, New York 10523 Secretary of FUJIFILM America, Inc.
Secretary of Enovation Graphic Systems, Inc.
Secretary of FPF Acquisition Corp.
Noboru Tanaka(1) Treasurer of Fuji Photo Film U.S.A., Inc. 1996 to date
555 Taxter Road Treasurer of FUJIFILM America, Inc.
Elmsford, New York 10523 Treasurer of Enovation Graphic Systems, Inc.
Treasurer of FPF Acquisition Corp.
Hideyuki Hayashi(1)* Chief Executive Officer, President and Director of Fujicolor 2000 to date
555 Taxter Road Processing, Inc.
Elmsford, New York 10523 Chief Executive Officer and Director of Fujicolor Processing, 1998 to date
Inc.
Treasurer and Director of Fujicolor Processing, Inc. 1996 to 1998
Director of Fujicolor Processing, Inc. 1996 to date
Director of Fuji Photo Film U.S.A., Inc.
Minoru Ohnishi(1)* Representative Director, Chairman and Chief Executive Officer 1996 to date
26-30, Nishiazabu 2-Chome of Fuji Photo Film Co., Ltd.
Minato-Ku, Tokyo 106-8620 Director of FUJIFILM America, Inc.
Japan Director of Fuji Photo Film U.S.A., Inc.
F. Herbert Prem, Jr.* Retired Partner, Whitman Breed Abbott & Morgan 1996 to 1999
325 E. 72nd Street, Apt. 15D Director of Fuji Photo Film U.S.A., Inc.
New York, New York 10021
- ---------------
(1) Citizen of Japan
I-1
2. Directors and Executive Officers of Enovation Graphic Systems, Inc. The
name, business address, current principal occupation or employment and five-
year employment history of each director and executive officer of Enovation and
certain other information are set forth below. None of the directors and
officers of Enovation Graphic Systems, Inc. listed below has, during the past
five years, (1) been convicted in a criminal proceeding or (2) been a party to
any judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. All directors and officers listed
below are citizens of the United States, unless otherwise indicated. Directors
are identified by an asterisk.
Current Principal Occupation or Employment and Period Served in
Name and Business Address Five-Year Employment History Such Office(s)
- ------------------------------- ------------------------------------------------------------- ------------------------------
Yasuo Tanaka(1)* President and Director of Fuji Photo Film U.S.A., Inc. 1998 to date
555 Taxter Road Executive Vice President and Director of Fuji Photo Film 1996 to 1998
Elmsford, New York 10523 U.S.A., Inc.
Executive Vice President and Director of Fuji Photo Film Co.,
Ltd.
President and Director of FUJIFILM America, Inc.
President and Director of Enovation Graphic Systems, Inc.
President and Director of FPF Acquisition Corp.
Jonathan E. File Vice President, General Counsel and Secretary of Fuji Photo 1996 to date
555 Taxter Road Film U.S.A., Inc.
Elmsford, New York 10523 Secretary of FUJIFILM America, Inc.
Secretary of Enovation Graphic Systems, Inc.
Secretary of FPF Acquisition Corp.
Noboru Tanaka(1) Treasurer of Fuji Photo Film U.S.A., Inc. 1996 to date
555 Taxter Road Treasurer of FUJIFILM America, Inc.
Elmsford, New York 10523 Treasurer of Enovation Graphic Systems, Inc.
Treasurer of FPF Acquisition Corp.
- ---------------
(1) Citizen of Japan.
I-2
3. Directors and Executive Officers of FPF Acquisition Corp. The name,
business address, current principal occupation or employment and five-year
employment history of each director and executive officer of FPF Acquisition
Corp. and certain other information are set forth below. None of the directors
and officers of FPF Acquisition Corp. listed below has, during the past five
years, (1) been convicted in a criminal proceeding or (2) been a party to any
judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. All directors and officers listed
below are citizens of the United States, unless otherwise indicated. Directors
are identified by an asterisk.
Current Principal Occupation or Employment and Period Served in
Name and Business Address Five-Year Employment History Such Office(s)
- ------------------------------- ------------------------------------------------------------- ------------------------------
Yasuo Tanaka(1)* President and Director of Fuji Photo Film U.S.A., Inc. 1998 to date
555 Taxter Road Executive Vice President and Director of Fuji Photo Film 1996 to 1998
Elmsford, New York 10523 U.S.A., Inc.
Executive Vice President and Director of Fuji Photo Film
Co., Ltd.
President and Director of FUJIFILM America, Inc.
President and Director of Enovation Graphic Systems, Inc.
President and Director of FPF Acquisition Corp.
Jonathan E. File Vice President, General Counsel and Secretary of Fuji Photo 1996 to date
555 Taxter Road Film U.S.A., Inc.
Elmsford, New York 10523 Secretary of FUJIFILM America, Inc.
Secretary of Enovation Graphic Systems, Inc.
Secretary of FPF Acquisition Corp.
Noboru Tanaka(1) Treasurer of Fuji Photo Film U.S.A., Inc. 1996 to date
555 Taxter Road Treasurer of FUJIFILM America, Inc.
Elmsford, New York 10523 Treasurer of Enovation Graphic Systems, Inc.
Treasurer of FPF Acquisition Corp.
- ---------------
(1) Citizen of Japan.
I-3
4. Directors and Executive Officers of FUJIFILM America, Inc. The name,
business address, current principal occupation or employment and five-year
employment history of each director and executive officer of FUJIFILM America,
Inc. and certain other information are set forth below. None of the directors
and officers of FUJIFILM America, Inc. listed below has, during the past five
years, (1) been convicted in a criminal proceeding or (2) been a party to any
judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. All directors and officers listed
below are citizens of the United States, unless otherwise indicated. Directors
are identified by an asterisk.
Current Principal Occupation or Employment and Period Served in
Name and Business Address Five-Year Employment History Such Office(s)
- ------------------------------- ------------------------------------------------------------- ------------------------------
Yasuo Tanaka(1)* President and Director of Fuji Photo Film U.S.A., Inc. 1998 to date
555 Taxter Road Executive Vice President and Director of Fuji Photo Film 1996 to 1998
Elmsford, New York 10523 U.S.A., Inc.
Executive Vice President and Director of Fuji Photo Film
Co., Ltd.
President and Director of FUJIFILM America, Inc.
President and Director of Enovation Graphic Systems, Inc.
President and Director of FPF Acquisition Corp.
Jonathan E. File Vice President, General Counsel and Secretary of Fuji Photo 1996 to date
555 Taxter Road Film U.S.A., Inc.
Elmsford, New York 10523 Secretary of FUJIFILM America, Inc.
Secretary of Enovation Graphic Systems, Inc.
Secretary of FPF Acquisition Corp.
Noboru Tanaka(1) Treasurer of Fuji Photo Film U.S.A., Inc. 1996 to date
555 Taxter Road Treasurer of FUJIFILM America, Inc.
Elmsford, New York 10523 Treasurer of Enovation Graphic Systems, Inc.
Treasurer of FPF Acquisition Corp.
Minoru Ohnishi(1)* Representative Director, Chairman and Chief Executive Officer 1996 to date
26-30, Nishiazabu 2-Chome of Fuji Photo Film Co., Ltd.
Minato-Ku, Tokyo 106-8620 Director of FUJIFILM America, Inc.
Japan Director of Fuji Photo Film U.S.A., Inc.
- ---------------
(1) Citizen of Japan.
I-4
5. Directors and Executive Officers of Fuji Photo Film Co., Ltd. The name,
business address, current principal occupation or employment and five-year
employment history of each director and executive officer of Fuji Photo Film
Co., Ltd. and certain other information are set forth below. None of the
directors and officers of Fuji Photo Film Co., Ltd. listed below has, during
the past five years, (1) been convicted in a criminal proceeding or (2) been a
party to any judicial or administrative proceeding that resulted in a
judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws, or
a finding of any violation of federal or state securities laws. All directors
and officers listed below are citizens of Japan.
Current Principal Occupation or Employment and Period Served in
Name and Business Address Five-Year Employment History Such Office(s)
- ------------------------------- ------------------------------------------------------------- ------------------------------
Minoru Ohnishi Representative Director, Chairman and Chief Executive Officer 1996 to date
26-30, Nishiazabu 2-Chome of Fuji Photo Film Co., Ltd.
Minato-Ku, Tokyo 106-8620 Director of FUJIFILM America, Inc.
Japan Director of Fuji Photo Film U.S.A., Inc.
Masayuki Muneyuki Representative Director, Vice Chairman of Fuji Photo 2000 to date
26-30, Nishiazabu 2-Chome Film Co., Ltd.
Minato-Ku, Tokyo 106-8620 Representative Director, President of Fuji Photo Film Co., 1996 to 2000
Japan Ltd.
Shigetaka Komori Representative Director, President of Fuji Photo Film Co., 2000 to date
26-30, Nishiazabu 2-Chome Ltd.
Minato-Ku, Tokyo 106-8620 Managing Director of Fuji Photo Film Co., Ltd. 1999 to 2000
Japan Director of Fuji Photo Film Co., Ltd. 1995 to 1999
Yasushi Oishi Representative Director of Fuji Photo Film Co., Ltd. 2000 to date
26-30, Nishiazabu 2-Chome Representative Senior Managing Director of Fuji Photo 1998 to 2000
Minato-Ku, Tokyo 106-8620 Film Co., Ltd.
Japan Managing Director of Fuji Photo Film Co., Ltd. 1995 to 1998
Mitsutaka Sofue Director, Executive Vice President of Fuji Photo Film 2000 to date
26-30, Nishiazabu 2-Chome Co., Ltd.
Minato-Ku, Tokyo 106-8620 Managing Director of Fuji Photo Film Co., Ltd. 1998 to 2000
Japan Director of Fuji Photo Film Co., Ltd. 1993 to 1998
Tasuku Imai Director, Executive Vice President of Fuji Photo Film 2000 to date
26-30, Nishiazabu 2-Chome Co., Ltd.
Minato-Ku, Tokyo 106-8620 Managing Director of Fuji Photo Film Co., Ltd. 1999 to 2000
Japan Director of Fuji Photo Film Co., Ltd. 1995 to 1999
Yasuo Tanaka President and Director of Fuji Photo Film U.S.A., Inc. 1998 to date
555 Taxter Road Executive Vice President and Director of Fuji Photo 1996 to 1998
Elmsford, New York 10523 Film U.S.A., Inc.
Executive Vice President and Director of Fuji Photo Film
Co., Ltd.
President and Director of FUJIFILM America, Inc.
President and Director of Enovation Graphic Systems, Inc.
President and Director of FPF Acquisition Corp.
Nobuo Wakuya Director, Senior Vice President of Fuji Photo Film Co., Ltd. 2000 to date
26-30, Nishiazabu 2-Chome Director of Fuji Photo Film Co., Ltd. 1996 to 2000
Minato-Ku, Tokyo 106-8620
Japan
I-5
Current Principal Occupation or Employment and Period Served in
Name and Business Address Five-Year Employment History Such Office(s)
- ------------------------------- ------------------------------------------------------------- ------------------------------
Kotaro Aso Director, Senior Vice President of Fuji Photo Film Co., Ltd. 2000 to date
26-30, Nishiazabu 2-Chome Director of Fuji Photo Film Co., Ltd. 1998 to 2000
Minato-Ku, Tokyo 106-8620 Associate Director of Fuji Photo Film Co., Ltd. 1995 to 1998
Japan
Nobuyuki Hayashi Director, Senior Vice President of Fuji Photo Film Co., Ltd. 2000 to date
26-30, Nishiazabu 2-Chome President of Fuji Photo Film B.V. 2000 to date
Minato-Ku, Tokyo 106-8620 Director of Fuji Photo Film Co., Ltd. 1998 to 2000
Japan Managing Director of Fuji Photo Film B.V. 1998 to 2000
Associate Director of Fuji Photo Film Co., Ltd. 1995 to 1998
Jun Hayashi Senior Vice President of Fuji Photo Film Co., Ltd. 2000 to date
26-30, Nishiazabu 2-Chome Director of Fuji Photo Film Co., Ltd. 1996 to 2000
Minato-Ku, Tokyo 106-8620
Japan
Takashi Matsushima Senior Vice President of Fuji Photo Film Co., Ltd. 2000 to date
26-30, Nishiazabu 2-Chome Executive of Fuji Photo Film Co., Ltd. 1998 to 2000
Minato-Ku, Tokyo 106-8620 Director of Fuji Photo Film Co., Ltd. 1996 to 1998
Japan
Akikazu Mikawa Senior Vice President of Fuji Photo Film Co., Ltd. 2000 to date
26-30, Nishiazabu 2-Chome Executive of Fuji Photo Film Co., Ltd. 1998 to 2000
Minato-Ku, Tokyo 106-8620 Associate Director of Fuji Photo Film Co., Ltd. 1995 to 1998
Japan
I-6
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, 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, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
American Stock Transfer & Trust Company
By Mail: By Overnight Courier: By Hand:
59 Maiden Lane 59 Maiden Lane 59 Maiden Lane
New York, New York 10038 New York, New York 10038 New York, New York 10038
Attn: Exchange Department Attn: Exchange Department Attn: Exchange Department
By Facsimile Transmission:
(For Eligible Institutions Only)
(718) 234-5001
Confirm Facsimile by Telephone:
(718) 921-8200
Questions or requests for assistance may be directed to the Information Agent
or the Dealer Manager, at the addresses and telephone numbers set forth below.
Additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and related materials may be obtained from the
Information Agent or the Dealer Manager as set forth below and will be furnished
promptly at Purchaser's expense. Shareholders may also contact their broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent is:
D. F. King & Co., Inc.
77 Water Street
New York, New York 10005
(212) 269-5550 (Call Collect)
or
Call Toll Free: (800) 207-3158
The Dealer Manager is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Call Toll Free: (877) 652-6039