UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Amendment No. 3)
Proxy Statement Pursuant to Section 14(a) of
the Securities and Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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M & F Worldwide Corp.
(Name of Registrant as Specified in Its Charter)
(N/A)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed as shown below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
common stock of the Company, par value $0.01 per share.
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(2)
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Aggregate number of securities to which transaction applies:
10,939,931 shares of common stock.
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
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In accordance with
Exchange Act Rule 0-11(c), the filing fee of $31,753.15 was determined by
multiplying .00011610 by the aggregate merger consideration of $273,498,275. The aggregate merger
consideration was calculated by multiplying the 10,939,931 outstanding shares of common stock to be
acquired pursuant to the merger and the merger consideration of $25.00 per share.
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(4)
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Proposed maximum aggregate value of transaction:
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$273,498,275
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(5)
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Total fee paid:
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$31,753.15
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing registration statement number, or the Form or Schedule and date of its filing.
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(1)
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Amount
Previously
Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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M &
F WORLDWIDE CORP.
35 East 62nd Street
New York, NY 10065
November 18, 2011
To Our Stockholders:
We cordially invite you to attend a special meeting of the
stockholders of M & F Worldwide Corp., a Delaware
corporation (M & F Worldwide, the
Company, we, our or
us), which we will hold at Skadden, Arps, Slate,
Meagher & Flom LLP, Four Times Square, New York, NY
10036, on December 21, 2011, at 10:00 a.m. local time.
At the special meeting, holders of our common stock, par value
$0.01 per share (common stock), will be asked to
consider and vote upon a proposal to approve an Agreement and
Plan of Merger (as it may be amended from time to time, the
Merger Agreement), dated as of September 12,
2011, by and among the Company, MX Holdings One, LLC, a Delaware
limited liability company (Parent), MX Holdings Two,
Inc., a Delaware corporation (Merger Sub), and,
solely as specified therein, MacAndrews & Forbes
Holdings Inc., a Delaware corporation (Holdings),
pursuant to which Merger Sub will be merged with and into the
Company and each share of common stock outstanding at the
effective time of the merger (other than shares owned by the
Company, Merger Sub, and holders who have perfected and not
withdrawn a demand for appraisal rights) will be canceled and
converted into the right to receive $25.00, in cash, without
interest. The capital stock of each of Merger Sub and Parent is
100% beneficially owned by Holdings, which is 100% beneficially
owned by Ronald O. Perelman. Mr. Perelman beneficially owns
approximately 43.4% of the outstanding common stock.
To assist in evaluating the fairness to our stockholders of the
merger, our board of directors formed a special committee of
independent directors to consider and negotiate the terms and
conditions of the merger and to make a recommendation to our
board of directors.
Our board of directors, after receiving the recommendation of
the special committee, has approved and adopted the Merger
Agreement and determined that the merger is advisable, fair to
and in the best interest of the Company and its stockholders
(other than Holdings and its affiliates).
Our board of
directors unanimously (other than Mr. Perelman, Barry F.
Schwartz, William C. Bevins, Stephen G. Taub and Charles T.
Dawson) recommends that the stockholders of the Company vote
FOR the proposal to approve the Merger Agreement.
Mr. Perelman, Mr. Schwartz and Mr. Bevins
abstained from the vote of the board of directors because of
their affiliation with Holdings, and Mr. Taub and
Mr. Dawson abstained from the vote of the board of
directors because they are employees of our subsidiaries.
The enclosed proxy statement describes the Merger Agreement, the
merger and related agreements and provides specific information
concerning the special meeting. In addition, you may obtain
information about us from documents filed with the Securities
and Exchange Commission. We urge you to, and you should, read
the entire proxy statement carefully, including the appendices,
as it sets forth the details of the Merger Agreement and other
important information related to the merger.
Your vote is very important. The merger cannot be completed
unless holders of a majority of the (i) outstanding shares
of common stock vote in favor of the approval of the Merger
Agreement and (ii) outstanding shares of common stock
(excluding shares owned by Holdings or its affiliates) vote in
favor of the approval of the Merger Agreement. If you fail to
vote on the Merger Agreement, the effect will be the same as
a vote against the approval of the Merger Agreement.
While stockholders may exercise their right to vote their shares
in person, we recognize that many stockholders may not be able
to attend the special meeting. Accordingly, we have enclosed a
proxy that will enable you to vote your shares on the matters to
be considered at the special meeting even if you are unable to
attend. If you desire to vote in accordance with the board of
directors recommendation, you need only sign, date and
return the proxy in the enclosed postage-paid envelope to record
your vote. Otherwise, please mark the proxy to indicate your
vote; date and sign the proxy; and return it in the enclosed
postage-paid envelope. You also may vote your shares by proxy
using a toll-free telephone number or the Internet. We have
provided instructions on the proxy card for using these
convenient services.
Voting by proxy will not prevent you from voting your shares in
person if you subsequently choose to attend the special meeting.
You may also access the proxy materials on the Internet at
http://mandfworldwide.com/Financial_reporting/proxy_materials.htm.
Very truly yours,
Barry F. Schwartz
Chief Executive Officer and
President
Neither the Securities and Exchange Commission nor any state
securities regulatory agency has approved or disapproved the
merger, passed upon the merits or fairness of the merger or
passed upon the adequacy or accuracy of the disclosure in this
document. Any representation to the contrary is a criminal
offense.
This proxy statement is dated November 18, 2011
and is first being mailed to stockholders on or about
November 21, 2011.
M &
F WORLDWIDE CORP.
35 East 62nd Street
New York, NY 10065
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON DECEMBER 21, 2011
To Our Stockholders:
A special meeting of stockholders of M & F Worldwide
Corp., a Delaware corporation (M & F
Worldwide, the Company, we,
our or us), will be held at Skadden,
Arps, Slate, Meagher & Flom LLP, Four Times Square, New
York, NY 10036, on December 21, 2011, at
10:00 a.m. local time, for the following purposes:
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1.
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to consider and vote on a proposal to approve the Agreement and
Plan of Merger, (as it may be amended from time to time, the
Merger Agreement), dated as of September 12,
2011, by and among the Company, MX Holdings One, LLC, a Delaware
limited liability company, MX Holdings Two, Inc., a Delaware
corporation, and, solely as specified therein,
MacAndrews & Forbes Holdings Inc., a Delaware
corporation;
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to approve the adjournment of the special meeting, if necessary
or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the special meeting to approve
the Merger Agreement; and
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to act upon other business as may properly come before the
special meeting (provided the Company does not know, at a
reasonable time before the special meeting, that such matters
are to be presented at the meeting) or any adjournment or
postponement thereof.
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The holders of record of our common stock, par value $0.01 per
share (common stock), at the close of business on
November 14, 2011, are entitled to notice of and to vote at
the special meeting or at any adjournment or postponement
thereof. All stockholders of record are cordially invited to
attend the special meeting in person. A list of our stockholders
will be available at our headquarters located at 35 East
62nd Street, New York, NY, during ordinary business hours
for ten days prior to the special meeting.
Your vote is important, regardless of the number of shares of
common stock you own. The approval of the Merger Agreement by
the affirmative vote of holders of a majority of the
(i) outstanding shares of common stock and
(ii) outstanding shares of common stock (excluding shares
owned by Holdings or its affiliates) is a condition to the
consummation of the merger. The proposal to adjourn the special
meeting, if necessary or appropriate, to solicit additional
proxies requires the affirmative vote of holders of a majority
of the voting power present and entitled to vote. Even if you
plan to attend the special meeting in person, we request that
you complete, sign, date and return the enclosed proxy and thus
ensure that your shares will be represented at the special
meeting if you are unable to attend.
You also may vote your shares by proxy using a toll-free
telephone number or the Internet. We have provided instructions
on the proxy card for using these convenient services.
If you sign, date and return your proxy card without indicating
how you wish to vote, your proxy will be voted in favor of the
approval of the Merger Agreement and the proposal to adjourn the
special meeting, if necessary or appropriate, to solicit
additional proxies. If you fail to vote, the effect will be that
your shares will not be counted for purposes of determining
whether a quorum is present at the special meeting and will have
the same effect as a vote against the approval of the Merger
Agreement, but will not affect the vote regarding the
adjournment of the special meeting, if necessary or appropriate,
to solicit additional proxies.
Your proxy may be revoked at any time before the vote at the
special meeting by following the procedures outlined in the
accompanying proxy statement. If you are a stockholder of record
and do attend the special meeting and wish to vote in person,
you may revoke your proxy and vote in person.
By order of the Board of Directors
M & F WORLDWIDE CORP.
November 18, 2011
Important Notice Regarding the Availability of Proxy
Materials for the Special Meeting of Stockholders To be Held on
December 21, 2011
We have elected to provide access to our proxy materials both by
sending you this full set of proxy materials, including a proxy
card, and by notifying you of the availability of our proxy
materials on the Internet. The proxy materials are available at
http://mandfworldwide.com/Financial_reporting/proxy_materials.htm.
TABLE OF
CONTENTS
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Page
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1
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14
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18
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ANNEX A
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ANNEX B
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ANNEX C
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iv
SUMMARY
TERM SHEET
This Summary Term Sheet discusses the material information
contained in this proxy statement, including with respect to the
Merger Agreement, as defined below, and the merger. We encourage
you to read carefully this entire proxy statement, its annexes
and the documents referred to or incorporated by reference in
this proxy statement, as this Summary Term Sheet may not contain
all of the information that may be important to you. The items
in this Summary Term Sheet include page references directing you
to a more complete description of that topic in this proxy
statement.
The Parties to the Merger Agreement
M & F Worldwide Corp.
35 East 62nd Street
New York, NY 10065
Tel:
212-572-8600
M & F Worldwide Corp., referred to herein as
M & F Worldwide, the Company,
we, our or us, is a Delaware
corporation. M & F Worldwide is a holding company that
operates through four business segments: Harland Clarke, Harland
Financial Solutions, Scantron and Mafco Worldwide. Harland
Clarke is a provider of checks and related products, direct
marketing services and customized business and home office
products. Harland Financial Solutions provides technology
products and related services to financial institutions.
Scantron is a provider of data management solutions and related
services to educational, healthcare, commercial and governmental
entities worldwide including testing and assessment solutions,
patient information collection and tracking, and survey
services. Mafco Worldwide produces licorice products for sale to
the tobacco, food, pharmaceutical and confectionery industries.
See
Important Information Regarding M & F
Worldwide and its Directors and Executive
OfficersInformation Regarding M & F
Worldwide
beginning on page 97.
Additional information about M & F Worldwide is
contained in its public filings, which are incorporated by
reference hereto. See
Where You Can Find Additional
Information
beginning on page 113.
MacAndrews & Forbes Holdings Inc.
35 East 62nd Street
New York, NY 10065
Tel:
212-572-8600
MacAndrews & Forbes Holdings Inc., referred to herein
as Holdings, is a Delaware corporation. Holdings is
a diversified holding company with interests in biotechnology,
check printing and check related products and services, consumer
products, defense, education, entertainment, financial services,
gaming and other industries. The capital stock of Holdings is
100% owned by Ronald O. Perelman. See
Important
Information Regarding the Holdings Filing Persons and their
Directors and Executive OfficersHoldings
beginning on page 105.
MX Holdings One, LLC
35 East 62nd Street
New York, NY 10065
Tel:
212-572-8600
1
MX Holdings One, LLC, referred to herein as Parent,
is a Delaware limited liability company. Parent is a wholly
owned subsidiary of Holdings and was formed solely for the
purpose of holding the shares of common stock of Merger Sub and
other related transactions. Parent has not engaged in any
business other than in connection with the merger and other
related transactions. See
Important Information
Regarding the Holdings Filing Persons and their Directors and
Executive OfficersInformation Regarding Parent
beginning on page 105.
MX Holdings Two, Inc.
35 East 62nd Street
New York, NY 10065
Tel:
212-572-8600
MX Holdings Two, Inc., referred to herein as Merger
Sub, is a Delaware corporation. Merger Sub is a wholly
owned subsidiary of Parent and was formed solely for the purpose
of engaging in the merger and other related transactions. Merger
Sub has not engaged in any business other than in connection
with the merger and other related transactions. See
Important Information Regarding the Holdings Filing
Persons and their Directors and Executive
OfficersInformation Regarding Merger Sub
beginning on page 105.
The
Merger Proposal
You will be asked to consider and vote upon the proposal to
approve the Agreement and Plan of Merger, dated as of
September 12, 2011, by and among the Company, Parent,
Merger Sub and, solely as specified therein, Holdings, which, as
it may be amended from time to time, is referred to herein as
the Merger Agreement. The Merger Agreement provides
that Merger Sub will be merged with and into the Company, and
each outstanding share of common stock, par value $0.01 per
share, of the Company, referred to herein as the common
stock, other than shares owned by the Company, Merger Sub,
and holders who have perfected and not withdrawn a demand for
appraisal rights, which are collectively referred to herein as
excluded shares, will be converted into the right to
receive $25.00 in cash, without interest and less any required
withholding taxes.
The
Special Meeting (Page 77)
The special meeting will be held at Skadden, Arps, Slate,
Meagher & Flom LLP, Four Times Square, New York, NY 10036,
on December 21, 2011, at 10:00 a.m. local time.
Record
Date and Quorum (Page 77)
The holders of record of the common stock as of the close of
business on November 14, 2011, the record date for the
special meeting, are entitled to receive notice of and to vote
at the special meeting.
The presence at the special meeting, in person or by proxy, of
the holders of a majority of shares of common stock outstanding
on the record date will constitute a quorum, permitting the
Company to conduct its business at the special meeting.
Required
Vote (Page 77)
For the Company to complete the merger, under Delaware law,
stockholders holding at least a majority in voting power of the
common stock outstanding at the close of business on the record
2
date must vote FOR the approval of the Merger
Agreement. In addition, it is a condition to the consummation of
the merger that stockholders holding at least a majority in
voting power of the common stock outstanding at the close of
business on the record date and not owned by Holdings or its
affiliates must vote FOR the approval of the Merger
Agreement. A failure to vote your shares of common stock or an
abstention from voting will have the same effect as a vote
against the merger. Holdings and its affiliates are referred to
herein as excluded stockholders, and the
stockholders of the Company other than the Companys
officers and directors, Holdings and Holdings affiliates
are referred to herein as unaffiliated stockholders.
As of the record date, there were 19,333,931 shares of
common stock outstanding, of which Mr. Perelman may be
deemed to beneficially own 8,394,000 shares (consisting of
7,248,000 shares of common stock held through MFW Holdings
One LLC, a wholly owned subsidiary of Holdings and referred to
herein as MFW Holdings One, 1,012,666 shares of
common stock held through MFW Holdings Two LLC, a wholly owned
subsidiary of Holdings and referred to herein as MFW
Holdings Two, and 133,334 shares of common stock held
directly by Mr. Perelman), representing in the aggregate
approximately 43.4% of the outstanding shares of common stock as
of the record date. Mr. Perelman, MFW Holdings One and MFW
Holdings Two are collectively referred to herein as the
Holdings Investors. The Holdings Investors,
Holdings, Parent and Merger Sub are collectively referred to
herein as the Holdings Filing Persons.
The Holdings Investors have agreed to contribute to Merger Sub
immediately prior to the effective time of the merger the shares
of common stock held by them in exchange for shares of common
stock of Merger Sub. Holdings has agreed to vote all shares of
common stock that it beneficially owns in favor of approving the
Merger Agreement. See
Agreements Involving Common
Stock; Transactions Between Holdings Filing Persons and the
CompanyAgreements Involving Common StockContribution
Agreement
beginning on page 109.
In addition, excluded stockholders other than the Holdings
Investors own an additional 16,000 shares of common stock,
and have each agreed to vote such shares in favor of approving
the Merger Agreement. See
Important Information
Regarding M & F Worldwide and its Directors and
Executive Officers
beginning on page 97.
Because the excluded stockholders may be deemed to beneficially
own 8,410,000 shares of outstanding common stock, an
additional 5,461,966 shares of common stock (representing a
majority of the outstanding shares of common stock held by
stockholders other than the excluded stockholders), or
approximately 28.25% of the outstanding shares of common stock,
must vote in favor of the Merger Agreement to satisfy the
required vote under the Merger Agreement. The directors and
current executive officers of the Company (other than any such
director or executive officer who is an excluded stockholder),
all of whom have expressed their intent to vote in favor of the
proposal to approve the Merger Agreement because they view the
merger as an attractive opportunity to receive cash for their
shares of common stock at a premium to recent market prices, may
be deemed to beneficially own an additional 194,316 shares
of common stock (not including shares held through the Outside
Directors Deferred Compensation Plan). Except in their
capacities as members of the board of directors of the Company,
as applicable, no officer or director of the Company nor any
Holdings Filing Person has made any recommendation either in
support of or opposed to the merger or the Merger Agreement.
3
Conditions
to the Merger (Page 93)
Each partys obligation to complete the merger is subject
to the satisfaction of the following conditions, none of which
may be waived:
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the Merger Agreement must have been approved by the affirmative
vote of holders of a majority of the (i) outstanding shares
of common stock and (ii) outstanding shares of common stock
excluding shares owned by Holdings and its affiliates;
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the waiting period under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, referred to
herein as the
Hart-Scott-Rodino
Act, must have expired or been terminated; and
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no law or order shall have been enacted, issued or entered by a
governmental entity that restrains, enjoins or otherwise
prohibits consummation of the merger or the other transactions
contemplated by the Merger Agreement.
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The obligation of the Company to complete the merger is subject
to the satisfaction or waiver of the following conditions, any
of which may be waived:
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the representations and warranties of Parent and Merger Sub in
the Merger Agreement must be true and correct both when made and
as of the closing date of the merger (except with respect to
certain representations and warranties made as of a specified
date) in the manner described in
The Merger
AgreementConditions to the Merger
beginning on
page 93; and
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Parent and Merger Sub must have performed in all material
respects all obligations that they are required to perform under
the Merger Agreement prior to the closing date of the merger.
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The respective obligations of Parent and Merger Sub to complete
the merger are subject to the satisfaction or waiver of the
following conditions, any of which may be waived:
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the Companys representations and warranties in the Merger
Agreement must be true and correct both when made and as of the
closing date of the merger (except with respect to certain
representations and warranties made as of a specified date) in
the manner described in
The Merger
AgreementConditions to the Merger
beginning on
page 93;
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the Company must have performed in all material respects all
obligations that it is required to perform under the Merger
Agreement prior to the closing date of the merger; and
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from the date of the Merger Agreement, there shall not have
occurred any material adverse effect on the Company,
as described in
The Merger AgreementConditions to
the Merger
beginning on page 93.
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4
When the
Merger Will be Completed
We anticipate completing the merger during the fourth quarter of
2011 subject to approval of the Merger Agreement by the
Companys stockholders as specified herein and the
satisfaction of the other closing conditions.
Purposes
and Reasons for the Merger; Position of the Company as to
Fairness of the Merger; Recommendation of the Special Committee
and of our Board of Directors (Page 29)
Our board of directors formed a special committee, referred to
herein as the special committee, comprised of four
independent directors (Martha L. Byorum, Viet D. Dinh, Paul M.
Meister and Carl B. Webb) for the purpose of investigating,
evaluating and negotiating the proposal made by Holdings on
June 13, 2011, to acquire the common stock and, as
appropriate, reject or recommend to our full board of directors
the proposal by Holdings. On September 10, 2011, the
special committee unanimously (i) determined that the
Merger Agreement is advisable, fair to and in the best interests
of the stockholders (other than Holdings and its affiliates),
and (ii) recommended that the board of directors approve
the Merger Agreement. After considering such recommendation, the
board of directors of the Company unanimously (other than the
abstaining directors, as defined below), (i) approved and
adopted the Merger Agreement, (ii) determined that the
Merger Agreement is advisable, fair to and in the best interest
of the Companys unaffiliated stockholders and
(iii) resolved to recommend that the stockholders of the
Company approve the Merger Agreement. Accordingly, the board of
directors (other than the abstaining directors) recommends that
you vote FOR the proposal to approve the Merger
Agreement. Mr. Perelman, Barry F. Schwartz and William C.
Bevins abstained from the vote of the board of directors because
of their affiliation with Holdings, and Stephen G. Taub and
Charles T. Dawson abstained from the vote of the board of
directors because they are employees of subsidiaries of the
Company. Each of Mr. Perelman, Mr. Schwartz,
Mr. Bevins, Mr. Taub and Mr. Dawson is referred
to herein as an abstaining director.
In evaluating the fairness and advisability of the Merger
Agreement, the special committee considered information with
respect to the Companys financial condition, results of
operations, businesses, competitive position and business
strategy, on both a historical and prospective basis, as well as
current industry, economic and market conditions and trends. The
special committee considered the following factors, each of
which the special committee believes supports its determination
as to fairness:
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the then-current and historical market prices of the
Companys common stock;
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their views that the value of continuing as an independent
public company would not be as valuable as the merger
consideration being offered because of the potential risks and
uncertainties associated with the future prospects of the
Company;
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the Companys highly leveraged capital structure and the
significant risks relating to refinancing the Companys
existing debt, particularly in light of the volatile state of
the debt financing markets, which the special committee believed
would persist, and risks to the Companys business;
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the fact that the Companys stockholders other than
Holdings and its affiliates will receive cash for their shares
and will therefore have immediate liquidity and receive certain
value for their shares;
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5
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the presentation by Evercore Group L.L.C., referred to herein as
Evercore, to the special committee on
September 10, 2011 and the oral opinion delivered by
Evercore to the special committee (which was subsequently
confirmed in writing) that, as of such date and based upon and
subject to the assumptions made, matters considered and
limitations on the scope of review undertaken by Evercore as set
forth in its written opinion, the $25.00 per share merger
consideration was fair, from a financial point of view, to the
holders of shares of common stock (other than Holdings and its
affiliates), as more fully described in the section titled
Special FactorsOpinion of Evercore Group
L.L.C.
beginning on page 35;
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the terms of the Merger Agreement, as more fully described in
the section titled
The Merger Agreement
beginning on page 81;
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the requirement that the Merger Agreement must be approved by
the holders of a majority of the outstanding common stock of the
Company, other than shares held by Holdings or any of its
affiliates; and
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the additional factors described in detail under
Special FactorsPurposes and Reasons for the
Merger; Position of the Company as to Fairness of the Merger;
Recommendation of the Special Committee and of our Board of
Directors
beginning on page 29.
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In evaluating the fairness and advisability of the Merger
Agreement, the special committee also considered, among other
factors, the following, each of which the special committee
viewed as being generally negative or unfavorable:
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Holdings would not agree to a proposed increase in the merger
consideration beyond the one dollar increase from its initial
proposal;
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the lack of alternatives available to the Company other than to
reject the proposed transaction and remain a public company;
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the fact that the Companys stockholders (other than
Holdings and its affiliates) will have no ongoing equity
participation in the Company following the merger;
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the possibility that Holdings could realize significant returns
on its equity investment in the surviving corporation following
the merger;
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the possibility that Holdings could sell some or all of the
Company following the merger to one or more purchasers at a
valuation higher than that being paid in the merger;
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the risk that the merger may not be completed even if approved
by the Companys stockholders and the holders of a majority
of the outstanding shares of common stock other than Holdings
and its affiliates; and
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the risks and costs to the Company if the merger does not close.
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6
The Companys board of directors, in making its
determination as to the fairness and advisability of the Merger
Agreement and the merger, considered a number of factors,
including the following:
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the process undertaken by the special committee and its advisors
in connection with evaluating the proposed merger, as described
above in the section titled
Special
FactorsBackground of the Merger
beginning on
page 18;
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the opinion, dated September 10, 2011, of Evercore to the
special committee as described above and as more fully described
in the section titled
Special FactorsOpinion of
Evercore Group L.L.C.
beginning on page 35;
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their own views that the value of continuing as an independent
public company would not be as valuable as the merger
consideration being offered because of the potential risks and
uncertainties associated with the future prospects of the
Company; and
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the additional factors described in detail under
Special FactorsPurposes and Reasons for the
Merger; Position of the Company as to Fairness of the Merger;
Recommendation of the Special Committee and of our Board of
Directors
beginning on page 29.
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For a more complete discussion of the factors considered by our
board of directors in reaching its decision to approve and adopt
the Merger Agreement and the merger, see
Special
FactorsPurposes and Reasons for the Merger; Position of
the Company as to Fairness of the Merger; Recommendation of the
Special Committee and of our Board of Directors
.
Opinion
of Evercore Group L.L.C. (Page 35 and
Annex B)
On September 10, 2011, at a meeting of the special
committee, Evercore delivered to the special committee its oral
opinion, which was subsequently confirmed by delivery of a
written opinion dated September 10, 2011, that, as of such
date and based upon the procedures followed and subject to
assumptions made, matters considered and limitations on the
scope of review undertaken by Evercore as set forth in its
opinion, the merger consideration was fair, from a financial
point of view, to the holders of shares of common stock (other
than Holdings and its affiliates) entitled to receive such
merger consideration. The full text of Evercores written
opinion is attached as Annex B to this proxy statement. The
opinion was addressed to the special committee and addresses
only the fairness, from a financial point of view, of the merger
consideration to the holders of shares of common stock (other
than Holdings and its affiliates) entitled to receive such
merger consideration. The opinion does not address any other
aspect of the merger and does not constitute a recommendation to
the special committee, our board of directors or to any other
person in respect of the merger, including as to how any holder
of shares of common stock should vote or act in respect of the
merger.
Holdings
Filing Persons Purpose and Reasons for the Merger
(Page 49)
The Holdings Filing Persons purpose for engaging in the
merger is to increase Mr. Perelmans beneficial
ownership of common stock from his current position of
approximately 43.4% of the outstanding common stock to 100%.
Upon completion of the merger, the Company will become an
indirect wholly owned subsidiary of Holdings, which is 100%
owned by Mr. Perelman. See
Special
FactorsHoldings Filing Persons Purposes and Reasons
for the Merger
beginning on page 49 for an
additional discussion as to why the Holdings Filing Persons are
pursuing the merger at this time.
7
Holdings
Filing Persons Position as to Fairness of the Merger
(Page 50)
The Holdings Filing Persons believe that the merger is fair to
the stockholders of the Company other than Holdings and its
affiliates. In arriving at their position as to the fairness of
the merger, the Holdings Filing Persons considered the factors
discussed in the section entitled
Special
FactorsHoldings Filing Persons Position as to
Fairness
beginning on page 50.
Plans for
M & F Worldwide after the Merger
(Page 57)
It is expected that the Companys operations will be
conducted substantially as they currently are being conducted.
See
Special FactorsPlans for M & F
Worldwide after the Merger
beginning on page 57
for an additional discussion as to the Holdings Filing
Persons plans for the Company after the merger.
Certain
Effects of the Merger (Page 63)
If the conditions to the closing of the merger are either
satisfied or, to the extent permitted, waived, Merger Sub will
be merged with and into the Company, the separate corporate
existence of Merger Sub will cease and the Company will continue
its corporate existence under Delaware law as the surviving
corporation in the merger, with all of its and Merger Subs
rights, privileges, immunities, powers and franchises continuing
unaffected by the merger. Upon completion of the merger, shares
of common stock other than excluded shares will be converted
into the right to receive $25.00 per share, without interest and
less any required withholding taxes. Following the completion of
the merger, the common stock will no longer be publicly traded,
and you will cease to have any ownership interest in the Company.
Interests
of the Companys Directors and Executive Officers in the
Merger (Page 64)
In considering the recommendation of the special committee and
the board of directors with respect to the Merger Agreement, you
should be aware that some of the Companys directors and
executive officers have interests in the merger that may be
different from, or in addition to, the interests of the
Companys stockholders generally. Common stock beneficially
owned by Mr. Perelman, a director of the Company, will not
be cancelled in the merger, and he and his affiliates will
acquire the remaining capital stock of the Company, as discussed
in the section entitled
Special FactorsCertain
Effects of the Merger
beginning on page 63. Other
interests of officers and directors that may be different from
or in addition to the interests of the Companys
stockholders include the treatment of deferred compensation plan
stock accounts, possibility of employment with the Company
following the effective time and indemnification and insurance
arrangements with officers and directors following the effective
time, as well as the other interests discussed in the section
entitled
Special FactorsInterests of the
Companys Directors and Executive Officers in the
Merger
beginning on page 64. The special
committee and the board of directors were aware of the different
or additional interests set forth herein and considered such
interests along with other matters in approving the Merger
Agreement and the transactions contemplated thereby, including
the merger.
Financing
of the Merger (Page 66)
Parent estimates that the total amount of funds necessary to
complete the proposed merger and related transactions is
approximately $273.5 million plus fees and expenses. See
The Merger
8
AgreementEstimated Fees and Expenses
. These
payments are expected to be funded by a combination of debt
financing and funds available to the surviving corporation at
the effective time of the merger. In connection with the signing
of the Merger Agreement, Holdings received an amended and
restated debt commitment letter, dated as of September 9,
2011, referred to herein as the Commitment Letter,
from Deutsche Bank Trust Company Americas, referred to
herein as Deutsche Bank, pursuant to which, subject
to the conditions set forth therein, Deutsche Bank has committed
to provide to Parent up to $250 million through a senior
secured term loan facility. The proceeds of the loan will be
used to (i) fund a portion of the aggregate merger
consideration and pay fees and expenses incurred in connection
therewith and (ii) refinance
and/or
repay
existing indebtedness owed by certain subsidiaries of Holdings
to Deutsche Bank. The consummation of the merger is not
conditioned upon receipt of any financing.
Material
United States Federal Income Tax Consequences
(Page 67)
If you are a U.S. holder, the receipt of cash in the merger
will generally be a taxable transaction for U.S. federal
income tax purposes. For U.S. federal income tax purposes,
your receipt of cash in exchange for your shares of common stock
will generally cause you to recognize a gain or loss measured by
the difference, if any, between the cash you receive in the
merger and your adjusted basis in your shares. If you are a
non-U.S. holder,
you generally will not be subject to United States federal
income tax unless you have certain connections to the United
States. You should consult your tax advisor for a full
understanding of how the merger will affect your taxes.
Regulatory
Approvals (Page 69)
The merger is subject to review under the
Hart-Scott-Rodino
Act. The initial filings under the
Hart-Scott-Rodino
Act were made on September 21, 2011, for each of the
Company and Mr. Perelman. On September 30, 2011, early
termination of the waiting period under the
Hart-Scott-Rodino
Act regarding Mr. Perelmans acquisition of shares of
M & F Worldwide pursuant to the merger was granted.
Anticipated
Accounting Treatment of the Merger (page 69)
M & F Worldwide, as the surviving corporation, will
account for the merger as a business combination using the
purchase method of accounting for financial accounting purposes,
whereby the estimated purchase price would be allocated to the
assets and liabilities of M & F Worldwide based on
their relative fair values following FASB Accounting Standards
Codification Topic 805, Business Combinations.
Litigation
(Page 69)
Following the announcement on June 13, 2011 by Holdings of
its proposal to acquire the outstanding shares of the
Companys common stock not owned by it for cash, three
purported shareholders each filed complaints in the Delaware
Court of Chancery, beginning on June 14, 2011, referred to
herein as the Delaware actions, and two complaints
were filed by purported shareholders in the Supreme Court of the
State of New York, beginning on June 17, 2011, referred to
herein as the New York actions.
9
On July 14, 2011, the Delaware Court of Chancery granted an
order consolidating the Delaware actions, referred to herein as
the Consolidated Delaware Action, and appointing
co-lead counsel.
On September 14, 2011, the Delaware Court of Chancery
granted a Stipulated Order of Class Certification and Case
Management, which, among other things, certified the
Consolidated Delaware Action as a class action pursuant to
Delaware Court of Chancery Rules 23(a), 23(b)(1), and
23(b)(2) without opt-out rights. The class consists of all
persons who held shares of common stock (excluding defendants
named in the Consolidated Delaware Action and any person, firm,
trust, corporation or other entity affiliated with any of the
defendants) at any time during the period from and including
June 13, 2011, through the date of consummation of the
merger.
On September 15, 2011, the Supreme Court of the State of
New York granted defendants cross-motion to dismiss or
stay one of the New York actions without prejudice to that
plaintiffs right to seek to intervene in the Consolidated
Delaware Action.
On the same day, the co-lead plaintiffs in the Consolidated
Delaware Action filed a verified consolidated complaint ,
referred to herein as the Consolidated Complaint.
The Consolidated Complaint alleges that each of the members of
the Companys board of directors breached their fiduciary
duties, and further asserts claims for unfair
dealing and breach of fiduciary duty against
Mr. Perelman and Holdings. The Consolidated Complaint
seeks, among other things, to preliminarily and permanently
enjoin the defendants from effectuating the merger, along with a
declaration that the members of the board breached their
fiduciary duties, an accounting, rescissory damages, costs and
fees.
On September 23, 2011, the parties to the remaining New
York Action entered into a stipulation discontinuing that action
without prejudice and without prejudice to that plaintiffs
right to seek to intervene in the Consolidated Delaware Action.
On November 14, 2011, the Delaware Court of Chancery
entered a scheduling order, which set December 14, 2011 as
the date for the preliminary injunction hearing.
Defendants believe that the claims in the Consolidated Complaint
are entirely without merit and intend to defend these actions
vigorously.
Dissenters
Rights of Appraisal (Page 70 and Annex C)
M & F Worldwide stockholders who do not vote in favor
of the Merger Agreement and who perfect their appraisal rights
under Delaware law will have the right to a judicial appraisal
of the fair value of their shares of common stock. In addition
to not voting in favor of the merger, the stockholder must
deliver to M & F Worldwide a written demand for
appraisal of such stockholders shares prior to the vote on
the Merger Agreement and continue to hold such shares until the
consummation of the merger.
10
No
Solicitation of Transactions (Page 89)
Pursuant to the Merger Agreement, neither the Company nor its
officers, directors and representatives will:
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initiate, solicit, or knowingly encourage, induce or assist any
inquiries or the making, submission or announcement of any
proposal or offer that constitutes, or could reasonably be
expected to lead to, any acquisition proposal, as
defined in the section entitled
The Merger
AgreementNo Solicitation of Transactions
beginning on page 89;
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execute or enter into any contract with respect to an
acquisition proposal, other than an acceptable confidentiality
agreement;
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engage in, continue or otherwise participate in any discussions
or negotiations regarding, or provide or furnish any non-public
information or data relating to the Company or any of our
subsidiaries or afford access to the business, properties,
assets, books, records or personnel of the Company or any of our
subsidiaries to any person (other than Parent, Merger Sub, or
any of their respective affiliates, designees or
representatives) with the intent to initiate, solicit,
encourage, induce or assist the making, submission or
commencement of, any proposal or offer that constitutes, or
could reasonably be expected to lead to, any acquisition
proposal; or
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otherwise knowingly facilitate any effort or attempt to make an
acquisition proposal.
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We may, prior to the approval of the Merger Agreement by our
stockholders at the special meeting, in response to a bona fide
written acquisition proposal, participate in discussions
regarding such acquisition proposal solely to clarify the terms
of such acquisition proposal and if our board of directors has
determined in good faith that the acquisition proposal is or
could reasonably be expected to result in a superior
proposal, as defined in the section entitled
The
Merger AgreementNo Solicitation of Transactions
beginning on page 89, and, after consultation with outside
legal counsel, that failure to take such action would be
inconsistent with the fiduciary obligations of our board of
directors under applicable laws, we may:
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furnish access and non-public information relating to the
Company to the person who has made such acquisition
proposal; and
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participate in discussions and negotiations regarding such
acquisition proposal.
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The Company may not (i) withdraw, modify or amend the board
of directors recommendation in any manner adverse to
Parent, (ii) approve, endorse or recommend an acquisition
proposal or, (iii) at any time following receipt of an
acquisition proposal, fail to reaffirm its approval or
recommendation of the Merger Agreement and merger as promptly as
practicable (but in any event within five business days after
receipt of any reasonable written request to do so from Parent),
each of the foregoing referred to herein as an Adverse
Company Recommendation.
Notwithstanding these restrictions, prior to the approval of the
Merger Agreement by our stockholders, our board of directors
may, to the extent it determines in good faith, after
consultation with outside legal counsel, that failure to take
such action would be inconsistent with its fiduciary
11
duties, in response to (i) a superior proposal received by
our board of directors after the date of the Merger Agreement or
(ii) an intervening event, as defined in the
section entitled
The Merger AgreementNo
Solicitation of Transactions
beginning on
page 89, make an Adverse Company Recommendation, but only if
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we first provide Parent prior written notice, at least three
business days in advance, that we intend to make such Adverse
Company Recommendation, and, in the case of a superior proposal,
are prepared to terminate the Merger Agreement to enter into a
contract with respect to a superior proposal; and
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during the three business days after the receipt of such notice
(it being understood and agreed that in the case of a superior
proposal, any material change to the financial or other terms
and conditions of such superior proposal shall require an
additional notice by us to Parent of a two business day period
which may, in whole or in part, run concurrently with the
initial three business day period), we have negotiated with
Parent in good faith (to the extent Parent desires to negotiate)
to make such adjustments in the terms and conditions of the
Merger Agreement so that there is no longer a basis to make such
Adverse Company Recommendation.
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Termination
(Page 94)
The Company and Parent may terminate the Merger Agreement by
mutual written consent at any time before the completion of the
merger. In addition, either the Company or Parent may terminate
the Merger Agreement if:
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the merger has not been completed by March 31, 2012, except
that this right will not be available to any party whose failure
to fulfill any obligation under the Merger Agreement has been a
principal cause of, or resulted in, the failure to timely
complete the merger;
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the Merger Agreement has been submitted to our stockholders for
approval and the required vote has not been obtained; or
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any final nonappealable injunction, order, decree, judgment or
ruling, permanently enjoins or otherwise prohibits the merger.
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Parent may terminate the Merger Agreement if:
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prior to stockholder approval of the Merger Agreement, our board
effects an Adverse Company Recommendation; or
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there is a breach of any representation, warranty, covenant or
agreement on the part of the Company such that (if such breach
occurred or was continuing as of the closing date) the
conditions relating to the Companys representations,
warranties, covenants and agreements would be incapable of
fulfillment and which breach is incapable of being cured, or is
not cured, within 15 days following receipt of written
notice of such breach.
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12
The Company may terminate the Merger Agreement if:
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prior to stockholder approval of the Merger Agreement, in
response to a superior proposal or intervening event, our board
effects an Adverse Company Recommendation in compliance with the
terms and conditions specified in the Merger Agreement; or
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there is a breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub such that (if such
breach occurred or was continuing as of the closing date) the
conditions relating to Parents and Merger Subs
representations, warranties, covenants and agreements would be
incapable of fulfillment and which breach is incapable of being
cured, or is not cured, within 15 days following receipt of
written notice of such breach.
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Termination
Fees; Reimbursement of Expenses (Page 95)
The Company is required to pay a termination fee of $8,250,000
to Parent:
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if we terminate the Merger Agreement as provided above as a
result of an Adverse Company Recommendation made in connection
with the receipt of a superior proposal; or
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if Parent terminates the Merger Agreement as a result of an
Adverse Company Recommendation made in connection with the
receipt or announcement of an acquisition proposal.
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The Company is required to pay all of Parents, Merger
Subs and their respective Affiliates reasonable
out-of-pocket
fees and expenses (including reasonable legal fees and expenses)
actually incurred on or prior to the termination, not to exceed
$4,000,000:
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if we terminate or if Parent terminates the Merger Agreement
because of a failure to obtain the required vote of our
stockholders and, prior to our stockholders vote, an
acquisition proposal was made or publicly announced and such
acquisition proposal was not publicly withdrawn without
qualification at least five business days prior to our
stockholder vote;
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if Parent terminates upon an Adverse Company Recommendation,
under circumstances in which the $8,250,000 termination fee
described above is not payable; or
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if we terminate the Merger Agreement as provided above because
of an Adverse Company Recommendation made in connection with an
intervening event.
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13
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers address briefly some
questions you may have regarding the special meeting, the Merger
Agreement and the merger. These questions and answers may not
address all questions that may be important to you as a
stockholder of the Company. Please refer to the more detailed
information contained elsewhere in this proxy statement, the
annexes to this proxy statement and the documents referred to or
incorporated by reference in this proxy statement.
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Q:
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What is the proposed transaction?
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A:
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The proposed transaction is the merger of Merger Sub with and
into the Company pursuant to the Merger Agreement. Following the
effective time of the merger, the Company would be privately
held by the Holdings Investors.
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Q:
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What will I receive in the merger?
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A:
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If the merger is completed, you will receive $25.00 in cash,
without interest and less any required withholding taxes, for
each share of common stock that you own. For example, if you own
100 shares of common stock, you will receive $2,500 in cash
in exchange for your shares of common stock, less any required
withholding taxes. You will not be entitled to receive shares in
the surviving corporation.
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Q:
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Where and when is the special meeting?
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A:
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The special meeting will take place on December 21, 2011,
starting at 10:00 a.m. local time at Skadden, Arps, Slate,
Meagher & Flom LLP, Four Times Square, New York, NY
10036.
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Q:
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What matters will be voted on at the special meeting?
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A:
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You will be asked to consider and vote on the following
proposals:
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to approve the Merger Agreement;
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to approve the adjournment of the special meeting, if necessary
or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the special meeting to approve
the Merger Agreement; and
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to act upon other business that may properly come before the
special meeting or any adjournment or postponement thereof
(provided the Company does not know, at a reasonable time before
the special meeting, that such matters are to be presented at
the meeting).
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Q:
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What vote of our stockholders is required to approve the
Merger Agreement?
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A:
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For the Company to complete the merger, under Delaware law,
stockholders holding at least a majority in voting power of
common stock outstanding at the close of business on the record
date must vote FOR the approval of the Merger
Agreement. In addition, it is a condition to the consummation of
the merger that stockholders holding at least a majority in
voting power of common stock outstanding at the close of
business on the record date and not owned by excluded
stockholders must vote
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FOR the approval of the Merger Agreement. A failure
to vote your shares of common stock or an abstention from voting
will have the same effect as a vote against the merger.
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As of the record date, there are 19,333,931 shares of
common stock outstanding. Excluded stockholders may be deemed to
beneficially own 8,410,000 shares of common stock.
Accordingly, an additional 5,461,966 shares of common stock
(representing a majority of the outstanding shares of common
stock held by stockholders other than the excluded
stockholders), or approximately 28.25% of the outstanding shares
of common stock, must vote in favor of the Merger Agreement to
satisfy the required vote under the Merger Agreement. The
directors and current executive officers of the Company (other
than any such director or executive officer who is an excluded
stockholder), all of whom have expressed their intent to vote in
favor of the proposal to approve the Merger Agreement because
they view the merger as an attractive opportunity to receive
cash for their shares of common stock at a premium to recent
market prices, may be deemed to beneficially own an additional
194,316 shares of common stock (not including shares held
through the Outside Directors Deferred Compensation Plan).
Except in their capacities as members of the board of directors,
as applicable, of the Company, no officer or director of the
Company nor any Holdings Filing Person has made any
recommendation either in support of or opposed to the merger or
the Merger Agreement.
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Q:
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What vote of our stockholders is required to approve the
proposal to adjourn the special meeting, if necessary, to
solicit additional proxies?
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A:
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The proposal to adjourn the special meeting, if necessary or
appropriate, to solicit additional proxies requires the
affirmative vote of the holders of a majority of the voting
power of common stock present or represented by proxy at the
special meeting.
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Q:
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How does the Companys board of directors recommend that
I vote?
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A:
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Our board of directors (other than the abstaining directors),
acting upon the unanimous determination of the special
committee, unanimously recommends that our stockholders vote
FOR the approval of the Merger Agreement and
FOR the adjournment proposal. You should read
Special FactorsPurposes and Reasons for the
Merger; Position of the Company as to Fairness of the Merger;
Recommendation of the Special Committee and of our Board of
Directors
for a discussion of the factors that our
board of directors considered in deciding to recommend the
approval of the Merger Agreement. See also
Special
FactorsInterests of the Companys Directors and
Executive Officers in the Merger
.
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Q:
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What effects will the merger have on M & F
Worldwide?
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A:
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M & F Worldwides common stock is currently
registered under the Securities Exchange Act of 1934, as
amended, referred to herein as the Exchange Act, and
is quoted on the New York Stock Exchange, referred to herein as
NYSE, under the symbol MFW. As a result
of the merger, the Company will cease to be a publicly traded
company and will be wholly owned by the Holdings Investors and
Parent. Following consummation of the merger, registration of
the common stock and our reporting obligations under the
Exchange Act will be terminated upon application to
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the Securities and Exchange Commission, referred to herein as
the SEC. In addition, upon consummation of the
merger, the common stock will no longer be listed on any stock
exchange or quotation system, including the NYSE.
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Q:
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What happens if the merger is not consummated?
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A:
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If the Merger Agreement is not approved by the Companys
stockholders or if the merger is not consummated for any other
reason, the Companys stockholders will not receive any
payment for their shares in connection with the merger. Instead,
the Company will remain a public company and shares of common
stock will continue to be listed and traded on NYSE. Under
specified circumstances, the Company may be required to pay
Parent a termination fee of $8,250,000 or reimburse Parent and
Merger Sub for their costs and expenses up to $4,000,000. See
The Merger AgreementTermination Fees
.
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Q:
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What do I need to do now?
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A:
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We urge you to read this proxy statement carefully, including
its annexes and the documents referred to as incorporated by
reference in this proxy statement, and to consider how the
merger affects you. If you are a stockholder of record, you can
ensure that your shares are voted at the special meeting by
submitting your proxy via:
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telephone, using the toll-free number listed on each proxy card;
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the Internet, at the address provided on each proxy card; or
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mail, by completing, signing, dating and mailing each proxy card
and returning it in the envelope provided.
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If you hold your shares in street name through a
broker, bank or other nominee you should follow the directions
provided by your broker, bank or other nominee regarding how to
instruct your broker, bank or other nominee to vote your shares.
Without those instructions, your shares will not be voted, which
will have the same effect as voting against the merger.
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Q:
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Should I send in my stock certificates or other evidence of
ownership now?
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A:
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No. After the merger is completed, you will be sent a
letter of transmittal with detailed written instructions for
exchanging your shares of common stock for the merger
consideration. If your shares of common stock are held in
street name by your broker, bank or other nominee,
you may receive instructions from your broker, bank or other
nominee as to what action, if any, you need to take to effect
the surrender of your street name shares in exchange
for the merger consideration.
Please do not send your
certificates in now.
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A:
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Yes, you can revoke your vote at any time before your proxy is
voted at the special meeting. If you are a stockholder of
record, you may revoke your proxy by notifying the
Companys Corporate Secretary in writing at M & F
Worldwide Corp., 35 East 62nd Street, New York, NY 10065,
or by submitting a new proxy by telephone, the
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Internet or mail, in each case, dated after the date of the
proxy being revoked. In addition, your proxy may be revoked by
attending the special meeting and voting in person (simply
attending the special meeting will not cause your proxy to be
revoked). Please note that if you hold your shares in
street name and you have instructed a broker, bank
or other nominee to vote your shares, the above-described
options for revoking your vote do not apply, and instead you
must follow the instructions received from your broker, bank or
other nominee to revoke your vote.
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Q:
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What does it mean if I get more than one proxy card or voting
instruction card?
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A:
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If your shares are registered differently or are held in more
than one account, you will receive more than one proxy or voting
instruction card. Please complete and return all of the proxy
cards or voting instruction cards you receive (or submit each of
your proxies by telephone or the Internet, if available to you)
to ensure that all of your shares are voted.
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Q:
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Who will count the votes?
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A:
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A representative of our transfer agent, American Stock
Transfer & Trust Company, LLC, will count the
votes and act as an inspector of election.
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Q:
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Who can help answer my other questions?
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A:
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If you have more questions about the merger, or require
assistance in submitting your proxy or voting your shares or
need additional copies of the proxy statement or the enclosed
proxy card, please contact D.F. King & Co., Inc., our
proxy solicitor, at
(800) 848-3416
(toll free) or
(212) 269-5550
(collect). If your broker, bank or other nominee holds your
shares, you should also call your broker, bank or other nominee
for additional information.
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17
SPECIAL
FACTORS
Background
of the Merger
Mr. Perelman, who currently beneficially owns approximately
43.4% of the common stock, has been the largest stockholder of
the Company and a member of its board of directors since 1995.
Holdings, of which Mr. Perelman owns 100% of the capital
stock, provides the services of Mr. Schwartz, the
Companys President and Chief Executive Officer, and
Mr. Paul G. Savas, the Companys Chief Financial
Officer, as well as other management, advisory, transactional,
corporate finance, legal, risk management, tax and accounting
services pursuant to the terms of a management services
agreement. See
Agreements Involving Common Stock;
Transactions between Holdings Filing Persons and the
CompanyManagement Services Agreement
.
Since his initial acquisition of securities of the Company,
Mr. Perelman has periodically reviewed his investment in
the Company, and from time to time has considered making
additional investments in the Company. In early May 2011,
Mr. Perelman began to consider the possibility of engaging
in a going private transaction with the Company.
Mr. Perelman considered such a transaction at this time
because he believed that the market was discounting the common
stock as a result of recent declines in the Companys
financial performance and poor market conditions, and that the
Companys stockholders would welcome the opportunity to
consider a transaction whereby they could immediately realize
the value of their investment in the Company through the receipt
of cash, at a premium to recent trading prices.
At this time, Mr. Perelman informed certain officers and
employees of Holdings, including Mr. Schwartz and
Mr. Savas, of his consideration of a transaction.
Representatives of Holdings thereafter consulted with Skadden,
Arps, Slate, Meagher & Flom LLP (Skadden),
Holdings legal counsel, regarding the legal ramifications
of engaging in a going private transaction,
including the desirability of including safeguards to ensure the
procedural fairness of the transaction, such as requiring that
the transaction be approved by a special committee of the board
of directors of the Company and by holders of a majority of the
outstanding shares of common stock other than Holdings and its
affiliates.
On or about May 23, 2011, Holdings initiated discussions
with representatives from Moelis & Company LLC,
referred to herein as Moelis, about representing
Holdings as its financial advisor in connection with a potential
transaction, and on May 24, 2011, Holdings orally engaged
Moelis to serve as its financial advisor. Following its
engagement, Moelis commenced due diligence with respect to the
Company and its subsidiaries.
During the week of May 30, 2011, representatives of
Holdings and Moelis participated in phone calls with lawyers
from Skadden to discuss potential transaction structures and
related matters. The other potential transaction structure that
Holdings considered during such phone calls was a tender offer.
Holdings determined during such discussions that the
consummation of any going private transaction proposed by it
would be conditioned upon the approval of both a special
committee of the Companys board of directors as well as
the stockholders other than the excluded stockholders. In light
of that determination, Holdings saw no advantage to proceeding
by means of a tender offer and preferred the simplicity of a
single-step merger.
On or about May 30, 2011, representatives of Holdings began
discussions with Deutsche Bank regarding the possibility of
obtaining financing in connection with a transaction.
18
On May 31, 2011, Moelis was provided with five year
financial projections for the Companys subsidiaries,
Harland Clarke Holdings Corp., referred to herein as
HCHC, and Mafco Worldwide Corporation, referred to
herein as Mafco Flavors, which were initially
prepared in April 2011 in connection with a contemplated
amendment and extension of HCHCs senior secured term loan
facility and a contemplated refinancing transaction of certain
indebtedness of Mafco Flavors, which ultimately were not
consummated.
On June 2 and June 3, 2011, Moelis and representatives of
Holdings discussed the financial projections that were provided
on May 31, 2011 and reviewed business segment performance
and key business risks associated with the Company. On
June 8, 2011, representatives of Moelis, Holdings and
Skadden met at Holdings offices for an additional
diligence session.
On June 9, 2011, Moelis and Holdings entered into an
engagement agreement. On the same day, Moelis made a
presentation to the management of Holdings regarding its
preliminary valuation analysis of the Company. See
Special FactorsSummary of Presentations by the
Financial Advisor to Holdings
.
On June 10, 2011, representatives of Holdings, Skadden and
Moelis discussed an appropriate price with respect to a Holdings
proposal to acquire the remaining common stock not held by it.
On the same day, Deutsche Bank delivered a commitment letter for
financing the transaction.
During the period from June 10, 2011 through June 12,
2011, Mr. Schwartz made courtesy phone calls to the members
of the Companys board of directors, alerting them to a
forthcoming proposal. No terms of a proposed transaction were
discussed during those calls. Also on June 10, 2011, a
partner at Ernst & Young, LLP, the Companys
auditor, was contacted by Holdings to inform him of a
forthcoming proposal.
On June 13, 2011, Mr. Schwartz sent a letter to the
Companys board of directors, proposing a transaction
pursuant to which a subsidiary of Holdings would be merged with
and into the Company and all outstanding shares of common stock
not owned by Holdings would be converted into the right to
receive $24.00 per share in cash. The full text of the letter
was filed with the SEC on June 13, 2011, and is set forth
below.
June 13, 2011
Board of Directors
M & F Worldwide Corp.
35 East 62nd Street
New York, New York 10065
Dear Board Members:
MacAndrews & Forbes Holdings Inc.
(M&F or we) is pleased to propose a
transaction pursuant to which M & F Worldwide Corp.
(the Company) would be merged with a subsidiary of
M&F, as a result of which all outstanding shares of common
stock of the Company not owned by M&F or its subsidiaries
would be converted into the right to receive $24.00 in cash per
share. The proposed cash consideration represents a greater than
41% premium to the Companys closing share price on
June 10, 2011.
19
The proposed transaction would allow the Companys
stockholders to immediately realize an attractive value, in
cash, for their investment and provides such stockholders
certainty of value for their shares, especially when viewed
against the operational risks inherent in the Companys
businesses and the market risks inherent in remaining a public
company. Moreover, the small public float and limited trading
volume of the Companys shares results in undesirable price
volatility and restricts opportunities for the Companys
stockholders to achieve liquidity with respect to their shares.
We believe that private ownership is in the best interests of
the Company, as it would result in operational efficiencies and
cost savings, while providing management with the flexibility to
focus on a long-term perspective without being constrained by
the public company emphasis on achieving short-term results.
Accordingly, we are confident that this proposal not only offers
compelling value to the Companys stockholders but is also
in the best interests of the Company and its other
constituencies.
The proposed transaction would be subject to the approval of the
Board of Directors of the Company and the negotiation and
execution of mutually acceptable definitive transaction
documents. It is our expectation that the Board of Directors
will appoint a special committee of independent directors to
consider our proposal and make a recommendation to the Board of
Directors. We will not move forward with the transaction unless
it is approved by such a special committee. In addition, the
transaction will be subject to a non-waivable condition
requiring the approval of a majority of the shares of the
Company not owned by M&F or its affiliates. Finally, given
our existing position and history with the Company, we will not
need to do any due diligence to enable us to be in a position to
negotiate and execute mutually acceptable definitive
documentation.
As you are aware, M&F owns approximately 43% of the
outstanding shares of common stock of the Company. In
considering this proposal, you should know that in our capacity
as a stockholder of the Company we are interested only in
acquiring the shares of the Company not already owned by us and
that in such capacity we have no interest in selling any of the
shares owned by us in the Company nor would we expect, in our
capacity as a stockholder, to vote in favor of any alternative
sale, merger or similar transaction involving the Company. If
the special committee does not recommend or the public
stockholders of the Company do not approve the proposed
transaction, such determination would not adversely affect our
future relationship with the Company and we would intend to
remain as a long-term stockholder.
Please be aware that this proposal is an expression of interest
only, and we reserve the right to withdraw or modify our
proposal in any manner. No legal obligation with respect to a
transaction shall arise unless and until execution of mutually
acceptable definitive documentation.
In accordance with its legal obligations, M&F promptly will
file an amendment to its Schedule 13D, including a copy of
this letter. We believe it is appropriate, as well, for us to
issue a press release regarding our proposal prior to the
opening of trading today. A copy of our press release is
attached for your information.
In connection with this proposal, we have engaged
Moelis & Company as our financial advisor and Skadden,
Arps, Slate, Meagher & Flom LLP as our legal advisor,
and
20
we encourage the special committee to retain its own legal and
financial advisors to assist it in its review. We and our
advisors look forward to working with the special committee and
its advisors to complete a mutually acceptable transaction, and
are available at your convenience to discuss any aspects of our
proposal.
Should you have any questions, please do not hesitate to contact
me.
Sincerely,
/s/ Barry F. Schwartz
Barry F. Schwartz
On the same day, Holdings issued a press a release announcing
its proposal and filed an amendment to its Schedule 13D to
reflect the making of the proposal.
At a special meeting held telephonically on June 14, 2011,
the Companys board of directors met to discuss the
Holdings proposal. Mr. Schwartz summarized Holdings
proposal for the Companys board and stated that given the
relationship between the Company and Holdings, the
representatives of Holdings on the Companys board would
not participate in any discussions concerning the Holdings
proposal. He stated, as indicated in the proposal letter
delivered by Holdings, that Holdings expected that the
Companys board would form a special committee of
independent directors in order to evaluate the Holdings
proposal. Mr. Schwartz noted that draft resolutions
creating a special committee of the Companys board of
directors had been circulated the prior evening and could be
adopted by the board if they met with the independent
directors approval. Messrs. Perelman, Schwartz,
Bevins, Dawson and Taub then left the meeting.
Paul M. Meister, an independent director of the Company who had
recently served as chairman of a special committee of
independent directors of the Company, then invited a
representative of Willkie Farr & Gallagher LLP
(Willkie Farr), which had served as counsel to that
special committee, to advise the independent directors of the
Company in connection with the process for considering the
Holdings proposal. Willkie Farr discussed with the independent
directors the role of a special committee in considering a
proposal such as the Holdings proposal and various related
matters, including matters of fiduciary duty, independence,
process, the role of legal and financial advisors, and the terms
of the Holdings proposal.
The board of directors then discussed with Willkie Farr, and
adopted, the resolutions that had previously been circulated.
The resolutions were adopted unanimously by those directors in
attendance at the meeting, who constituted a majority of the
board of directors. Messrs. Perelman, Schwartz, Bevins,
Dawson and Taub, who had excused themselves from the meeting,
did not participate in the vote. The resolutions created the
special committee, to be comprised solely of independent
directors, for the purpose of considering the Holdings proposal
on behalf of the Companys shareholders not affiliated with
Holdings. Among other things, the resolutions authorized the
special committee to investigate the Holdings proposal as the
special committee deemed appropriate; evaluate the terms of the
proposal; negotiate any element of the proposal; negotiate the
terms of any definitive agreement with respect to the proposal;
report to the board of directors its recommendations and
conclusions with respect to the proposal, including whether to
recommend that the proposal was fair to and in the best
interests of the unaffiliated stockholders and should be
approved by the board of directors, or to elect not to pursue
the Holdings proposal. The resolutions
21
further provided that the Companys board of directors
would not approve the Holdings proposal without a prior
favorable recommendation of the special committee and authorized
the special committee to retain legal counsel, financial advisor
and such other agents as the special committee deemed necessary
or desirable in connection with its consideration of the
Holdings proposal.
Following adoption of the resolutions, the independent directors
discussed their ability and willingness to serve on the special
committee and preliminarily determined that Martha L. Byorum,
Viet D. Dinh, Paul M. Meister, Bruce Slovin (who recused himself
the following day) and Carl B. Webb would serve on the special
committee, subject to further discussion between each of them
and counsel to the special committee as to their independence
from Holdings and its affiliates (other than the Company and its
subsidiaries). Once the members of the special committee had
been approved by the independent directors of the Company,
subject to individual discussions with counsel, the other
independent directors excused themselves from the meeting and
the members of the special committee discussed retaining
independent legal and financial advisors to assist with its
evaluation of the Holdings proposal. The special committee
unanimously decided to retain Willkie Farr and to interview
various financial advisors at a later date. After a discussion
and identification of potential candidates, the special
committee authorized Willkie Farr to coordinate interviews with
the prospective financial advisors.
The special committee and Willkie Farr then met in person on
June 21, 2011 (with Mr. Dinh in attendance by
telephone) to interview potential financial advisors. The
special committee members had numerous questions for each firm,
including with respect to each firms and each proposed
team members experience with special committee
representations, experience with the industries in which the
Company operates, current and previous relationships with
Holdings and its affiliates, and perspectives on the special
committees evaluation of the Holdings proposal. After
extensive discussion regarding the qualifications of each firm,
the special committee unanimously selected Evercore as its
financial advisor and, following a discussion of the economic
terms of such engagement, authorized Ms. Byorum to propose
a revision to Evercores fee proposal and Willkie Farr to
negotiate the other terms of Evercores engagement
agreement on behalf of the special committee. Among the reasons
for the selection of Evercore were Evercores recent
experience in evaluating companies in businesses similar to
those of the Companys subsidiaries, its experience in
advising special committees and the special committees
confidence in the capabilities of the senior members of the
Evercore team.
Following its engagement, Evercore commenced due diligence with
respect to the Company and its subsidiaries.
On June 28, 2011, the special committee met telephonically
with its legal and financial advisors. Evercore provided an
update on the diligence process and noted that it would be
conducting several in-person meetings with the Companys
management as well as with the management of its subsidiaries,
HCHC and Mafco Flavors.
On June
29-30,
2011,
the Company provided Evercore with financial projections for
HCHC and Mafco Flavors.
On July 6, 2011, representatives of Evercore and Willkie
Farr attended diligence meetings with the Companys
management team, which included, among other things, discussions
and review of the Companys capital structure and
refinancing plans, current strategies for each of the
Companys operating subsidiaries, the competitive
environment and industry dynamics for each of
22
the Companys businesses, any pending acquisitions or sales
of material assets and previously attempted sales or
acquisitions, historical operating and financial results and
financial projections.
On July 8, 2011, representatives of Evercore and Willkie
Farr attended diligence meetings with the management teams of
HCHC and Mafco Flavors. Management from each of HCHC and Mafco
Flavors gave presentations, after which there was further
discussion regarding, among other things, the industry and
competitive environment, organic growth strategy, acquisition
strategy, budgeting process, customer and supplier trends,
historical operating and financial results and financial
projections, of HCHC and Mafco Flavors, respectively, including
certain material changes to the business of HCHC that had
occurred in the preceding months and that are described in the
section entitled
Projected Financial
InformationProjections Provided to Evercore and the
Special Committee
. In light of the presentations,
Evercore questioned HCHC management regarding whether the HCHC
projections continued to reflect managements views as to
the business. HCHC management indicated that due to the changes
that had occurred in the business and in its industry since
April, the projections would need to be revised with a net
downward adjustment to reflect their current views of the
prospects of the HCHC business.
On July 13, 2011, the special committee met telephonically
(other than Mr. Dinh, who was unable to attend) with its
legal and financial advisors. Evercore discussed with the
special committee the diligence Evercore had conducted to date.
Evercore noted that the financial projections it had received
from HCHC and Mafco Flavors had been prepared in connection with
a contemplated amendment and extension of HCHCs senior
secured term loan facility and a contemplated refinancing
transaction with respect to certain indebtedness of Mafco
Flavors, which ultimately were not consummated, and that the
management of HCHC had indicated that the projections would need
to be revised with a net downward adjustment to reflect their
current views of the business. See
Special
FactorsProjected Financial Information
. After
extensive discussion with Evercore and Willkie Farr, the special
committee directed Evercore to request updated financial
projections from both HCHC and Mafco Flavors.
On July 22, 2011, Evercore received updated financial
projections from HCHC, which HCHC management said reflected the
then current views of HCHCs management as to HCHCs
business. Around this time, Mafco Flavors informed Evercore that
the financial projections for Mafco Flavors previously provided
to Evercore continued to reflect its managements views of
the business and that no update to such projections was
necessary.
On July 27, 2011, the special committee held a telephonic
meeting with its legal and financial advisors during which
Evercore led the special committee through an initial
presentation summarizing the updated financial projections it
had received from HCHC on July 22, 2011 and the differences
between the updated financial projections and the original
financial projections Evercore had previously received from the
Company.
On August 10, 2011, the special committee met in person
(with Mr. Dinh in attendance by telephone) with its legal
and financial advisors to discuss the Companys projections
in detail, including the updated financial projections Evercore
had received from HCHC, and to hear and discuss Evercores
preliminary views on valuation. Evercore discussed with the
special committee the differences between the original financial
projections Evercore had received and the updated financial
projections and described for the special committee the factors
that HCHCs management had said contributed to the changes
in the financial projections. See
Special
FactorsProjected Financial Information
.
Representatives of Evercore reviewed and discussed with the
special
23
committee information regarding the Companys historical
stock price performance and certain historical trading
multiples, and the special committee discussed with its
financial advisors the impact of current market volatility on
the Company and its stock price. Evercore also reviewed and
discussed with the special committee its preliminary financial
analyses, based on the updated financial projections, including
an analysis of selected publicly traded companies, a discounted
cash flow analysis, an illustrative analysis of the present
value of the future price of common stock, an analysis of
selected precedent transactions and an analysis of historical
premiums paid in precedent transactions. Evercores
presentation noted that the updated financial projections
resulted in a lower implied per share equity reference range for
common stock than did the original financing projections in the
case of its analysis of selected publicly traded companies,
discounted cash flow analysis and illustrative analysis of the
present value of the future price of common stock. These
analyses were later updated in Evercores final
presentation to the special committee on September 10,
2011, based on updated refinancing assumptions received by
Evercore on August 31, 2011. There were no material
differences between the results of the analyses Evercore
presented on August 10, 2011 and those it presented on
September 10, 2011, except that the illustrative analysis
of the present value of the future stock price of common stock
presented on August 10, 2011 indicated an implied per share
equity reference range for the Company of $21.87 to $31.24,
which was higher than the range presented on September 10,
2011 due to the updated refinancing assumptions. See
Special FactorsOpinion of Evercore Group
L.L.C.
. Evercore then provided the special committee
with its views as to potential strategic alternatives available
to the Company, including a sale to Holdings, potential
divestitures, a possible sale to a third party buyer and
maintaining the status quo and regarding the Companys
ability to realize value from any such potential strategic
alternative. With respect to the potential strategic alternative
of maintaining the status quo, the special committee was aware
that Evercores preliminary analysis of selected publicly
traded companies, discounted cash flow analysis and illustrative
analysis of the present value of the future price of common
stock contemplated the Companys remaining a publicly
traded company, but the special committee did not consider this
subset of Evercores valuation analyses apart from all of
the analyses presented by Evercore. After further discussions
with its legal and financial advisors, the special committee
requested that Evercore conduct further analysis regarding a
hypothetical alternative strategic transaction with a company
involved in a business similar to that of HCHC.
On August 17, 2011, the special committee met
telephonically with its legal and financial advisors to continue
its previous discussion regarding potential strategic
alternatives available to the Company. Evercore discussed with
the special committee considerations and financial analysis
relating to a hypothetical sale for cash of selected assets of
HCHC to a company in HCHCs industry. See
Special
FactorsEvercore Presentation to the Special Committee on
August 17, 2011
.
In light of Evercores view that potential strategic
alternatives (other than a hypothetical sale for cash of
selected assets of HCHC to a company in HCHCs industry, as
described in
Special FactorsEvercore Presentation
to the Special Committee on August 17, 2011,
if
such a hypothetical sale could be completed) would not likely
generate significant incremental value for the Companys
stockholders, and in light of the risks and uncertainties
involved in other potential alternatives, including,
significantly, the statement made by Holdings in its proposal
letter that it would not consider selling its stake in the
Company or vote in favor of any such alternative transaction and
the lack of historical interest on the part of the other company
in such hypothetical sale, the special committee did not believe
that strategic alternative transactions to the merger were
realistic. Following consideration of Evercores analysis,
the special committee discussed how to respond to the Holdings
proposal. After extensive discussion and in consultation with
its legal and financial advisors, the special committee decided,
as part of its negotiating strategy, to respond with
24
a counteroffer of $30.00 per share of common stock and directed
Evercore to contact Holdings and its advisors to communicate its
counteroffer. In formulating its negotiating strategy, the
special committee recognized, without identifying any minimum
acceptable merger consideration, that an acquisition by Holdings
of the shares not held by it and its affiliates would likely be
in the best interests of the Companys public shareholders
at valuations below $30.00 per share.
On August 18, 2011, representatives of Evercore called
representatives of Holdings and Moelis to relay the special
committees counteroffer of $30.00 per share of common
stock. Later on August 18, 2011, a representative of
Evercore received a call from Mr. Schwartz indicating that
Holdings would not accept the special committees $30.00
counteroffer but remained interested in further negotiating the
terms of a deal. Mr. Schwartz indicated that a
representative of Moelis would be contacting Evercore to further
discuss the proposal from Holdings.
On August 19, 2011, representatives of Evercore and Moelis
met telephonically to discuss their respective clients
perspectives on the valuation of the Company, with Moelis, as
financial advisor to Holdings, suggesting that, based on the
valuation implied by the Companys projections, a price in
excess of $24 per share could not be justified and Evercore, as
financial advisor to the special committee, suggesting that a
price of $30 per share was warranted.
On August 22, 2011, the Company provided Moelis with the
updated financial projections that had previously been provided
to Evercore on July 22, 2011, but which had not previously
been provided to Moelis or representatives of Holdings.
On August 25, 2011, Mr. Schwartz called
Mr. Meister to propose a meeting for the following week for
the purpose of determining whether an agreement could be reached
as to the consideration that would be paid to the Companys
stockholders other than Holdings and its affiliates in an
acquisition of the Company by Holdings. Mr. Schwartz told
Mr. Meister that if a deal could not be reached in the near
term, Holdings might abandon its efforts to acquire the entire
equity interest in the Company. Mr. Schwartz requested
that, in advance of the meeting, Willkie Farr and Holdings
legal counsel, Skadden, be instructed to work on the
non-financial terms of a merger agreement that could be executed
should Holdings and the special committee agree on the
consideration to be paid to the Companys public
shareholders in a merger. The meeting between
Messrs. Schwartz and Meister was subsequently scheduled for
September 9.
Later on August 25, 2011, Willkie Farr received from
Skadden a draft of the Merger Agreement for the acquisition of
the Company by Holdings. Consistent with the June 13 proposal
letter from Holdings, the draft Merger Agreement contained a
requirement that the merger be conditioned upon approval by
holders of a majority of the outstanding shares of common stock
other than Holdings and its affiliates in addition to the
Delaware law requirement that the merger agreement be approved
by a majority of the Companys outstanding shares.
On August 26, 2011, representatives of Evercore and Moelis
met telephonically to discuss their respective clients
perspectives on the valuation of the Company. During that call,
it became evident that Evercore and Moelis were using different
refinancing assumptions for HCHC, and Evercore and Moelis agreed
on the need for both advisors to use the Companys most up
to date refinancing expectations, which reflected the
challenging credit markets.
On August 31, 2011, Moelis communicated the Companys
updated refinancing assumptions for HCHC to Evercore, which
Moelis had used in its valuation analyses. These updated
refinancing
25
assumptions reflected Company managements assumption that
the refinancing would have an earlier closing date, with a
different mix of debt and at higher interest rates than
contemplated in May 2011.
On August 31, 2011, Willkie Farr distributed a
mark-up
of
the draft Merger Agreement to Skadden. In light of the shared
resources between Holdings and the Company, Willkie Farr
introduced the concept of a dual employee (someone
who works for both the Company and Holdings) whose knowledge of
matters would be excepted from the Companys
representations and warranties and whose action in breach of the
Merger Agreement would not be attributable to the Company.
Willkie Farr also added various exceptions to the definition of
material adverse effect and deleted certain
representations and warranties by the Company. In addition,
Willkie Farr suggested various changes to the fiduciary
out provisions (including regarding the definition of
superior proposal) and limited the scope of
contractual provisions in which a termination fee or expense
reimbursement would be payable to Holdings.
On September 2, 2011, representatives of Willkie Farr and
Skadden met telephonically to discuss certain terms of the
Merger Agreement and the various revisions Willkie Farr had
included in its markup. Later that day, Skadden distributed a
revised draft of the Merger Agreement to Willkie Farr accepting
most of the revisions proposed by Willkie Farr.
On September 5, 2011, Willkie Farr distributed to the
special committee a memorandum detailing the resolution of
various issues in the draft Merger Agreement and noting the
material issues remaining open, including the definition of
knowledge of the dual employees, the definition of
superior proposal for purposes of the fiduciary out
provisions and the circumstances under which a termination fee
or expense reimbursement would be payable.
On September 6, 2011, Skadden accepted the Willkie Farr
proposals on the definition of knowledge and the
circumstances under which a termination fee or expense
reimbursement would be payable provided that Willkie Farr accept
the Skadden counterproposal with respect to the definition of
superior proposal.
Also on September 6, 2011, representatives of Evercore,
Moelis and the Companys management met (with Moelis
participating telephonically) to discuss the Companys
updated refinancing assumptions for HCHC that the Company had
made in light of the challenging credit markets, which had been
provided to Evercore on August 31 and which are described
in the section entitled
Projected Financial
InformationProjections Provided to Evercore and the
Special Committee.
Later that day, the special committee met telephonically with
its legal and financial advisors and discussed the conversation
Mr. Meister had had with Mr. Schwartz on
August 25. Willkie Farr led the special committee through
the memorandum it had distributed to the special committee on
September 5, 2011 regarding the Merger Agreement,
highlighting the material open issues. Evercore also discussed
with the special committee the impact on its financial analyses
of the Companys updated refinancing assumptions that
Evercore had received from the Company. Evercore noted that it
had discussed these updated assumptions with Moelis and members
of the Companys management and shared with the special
committee its perspectives on the updated assumptions. Evercore
advised the special committee that it had incorporated these
updated assumptions into its own analyses and described in
detail the effect of the updated assumptions on certain of the
analyses it had undertaken. The special committee discussed
extensively with its advisors the reasoning behind the updated
26
refinancing assumptions and the negotiating strategy and
approach for the meeting to be held on September 9, 2011
between Mr. Meister and Mr. Schwartz, along with their
respective advisors.
During the week of September 6, 2011, representatives of
Willkie Farr discussed with various officers of the
Companys operating subsidiaries certain provisions of the
Merger Agreement and the preparation of the Company disclosure
schedules.
On September 7, 2011, representatives of Willkie Farr and
Skadden met telephonically to further discuss the open issues in
the Merger Agreement.
On September 8, 2011, Skadden distributed a revised draft
of the Merger Agreement to Willkie Farr reflecting the proposal
discussed between representatives of Willkie Farr and Skadden on
September 6, 2011, as well as acceptance of Willkie
Farrs initial proposal with respect to the definition of
superior proposal. Later that day, Willkie Farr sent
Skadden a
mark-up
of
the draft Merger Agreement reflecting comments received from the
Companys management unaffiliated with Holdings and a draft
of the related Company disclosure schedules. From
September 8, 2011 through execution of the Merger
Agreement, representatives of Willkie Farr and Skadden
negotiated certain other non-financial terms of the Merger
Agreement and Company disclosure schedules.
On September 9, 2011, Mr. Meister and representatives
of Evercore and Willkie Farr met with Mr. Schwartz, other
members of management of Holdings and representatives of Moelis
and Skadden to determine whether an agreement could be reached
on the consideration to be paid to the Companys public
shareholders in an acquisition of the Company by Holdings.
Mr. Schwartz began the meeting by explaining that
Holdings offer of $24.00 per share of common stock was
made in June 2011, but that if Holdings were making an offer
now, it would be offering substantially less than the $24.00 per
share of common stock it had proposed in June 2011.
Representatives of Moelis next led the meeting participants
through a presentation summarizing an overview of
U.S. equity capital market conditions, peer group trading
performance, leveraged loan and high yield debt pricing
conditions, as well as a comparison of the Companys prior
financial model for fiscal years 2012 and 2015 with the updated
model provided by the Companys management on
August 22, 2011, which contained lower revenue and EBITDA
projections than the prior projections. Moelis also provided an
analysis of illustrative investor returns comparing
Holdings offer of $24 per share with the special
committees proposal of $30 per share, assuming that all of
the Companys outstanding debt is refinanced in connection
with a transaction. Assuming 2015 exit multiples ranging from
4.00x to 5.00x, Moelis estimated that the illustrative internal
rate of return sensitivities to a potential acquirer ranged from
2.4% to 21.5% at the $24 per share offer price and (3.2%) to
14.9% at the $30 per share offer price. (Moelis presented a
preliminary version of these sensitivities to Holdings on
September 6, 2011.)
Mr. Savas next described the recent and projected
underperformance of GlobalScholar, LLC, which was acquired by
the Company in the beginning of 2011, even relative to the
updated financial projections provided to Evercore on
July 22, 2011. During the meeting, representatives of
Evercore also asked Mr. Schwartz and other members of
management of Holdings whether they were contemplating any
post-closing transaction that would have a material impact on
the prospects of the Companys businesses or the
refinancing of the Companys debt, and Mr. Schwartz
responded that no such transactions were contemplated.
Messrs. Schwartz and Meister then met separately to discuss
price. Mr. Schwartz refused to increase Holdings
$24.00 per share offer and Mr. Meister indicated to
Mr. Schwartz that he would not recommend to the special
committee acceptance of $24.00 per share. Mr. Meister then
met separately with representatives of Evercore and Willkie
Farr,
27
and once again separately with Mr. Schwartz. After
consultation with Mr. Perelman, Mr. Schwartz advised
Mr. Meister that Holdings would increase its offer price to
$25.00 per share but that the $25.00 offer was Holdings
best and final offer and would remain available only for a
limited period of time. After stating that he believed that no
further increase in the offer price would be made by Holdings,
Mr. Meister instructed Willkie Farr to update the other
members of the special committee of the result of the meeting.
In a phone conversation following the meeting, Skadden proposed
to Willkie Farr a termination fee of $9.5 million and an
expense reimbursement cap of $4 million. Later on
September 9, through further negotiations between Skadden
and Willkie Farr, Holdings agreed to reduce the proposed
termination fee to $8.25 million.
On September 10, 2011, the special committee met
telephonically with its legal and financial advisors. At
Mr. Meisters request, Willkie Farr began with an
update on the negotiations that took place on September 9,
2011 and continued with a summary of the process the special
committee had undertaken since it was formed. Representatives of
Evercore reviewed with the special committee its financial
analyses of the proposed merger consideration. Evercore then
delivered to the special committee its oral opinion, which was
subsequently confirmed by delivery of a written opinion dated
September 10, 2011, that, as of such date, and based upon
and subject to assumptions made, matters considered and
limitations on the scope of review undertaken by Evercore as set
forth in its opinion, the merger consideration of $25.00 per
share was fair, from a financial point of view, to the holders
of shares of common stock other than Holdings and its
affiliates. See
Special FactorsOpinion of
Evercore Group L.L.C.
Evercore noted to the special
committee that it had reached its conclusion as to fairness
without taking into account the most recent deterioration in
certain business units of the Company that had been communicated
by Mr. Savas at the meeting on September 9, 2011.
Representatives of Willkie Farr then provided an overview of the
transaction, including (i) a summary of key terms in the
Merger Agreement, (ii) an overview of the closing
conditions such as stockholder approvals that would be required
for the merger, including that it would need to be approved by
holders of a majority of the outstanding shares of common stock
other than Holdings and its affiliates, (iii) the
no-shop provisions and (iv) the fiduciary
out provisions that would apply in the event the Company
received a superior proposal or certain intervening events
occurred. After further discussion, the special committee
unanimously determined that the Merger Agreement, the merger and
the other transactions contemplated by the Merger Agreement were
advisable, fair to and in the best interests of the stockholders
of the Company other than Holdings and its affiliates and
recommended that the Companys board of directors approve
the Merger Agreement, the merger and the other transactions
contemplated by the Merger Agreement.
Also, later on September 10, 2011, Skadden distributed to
Willkie Farr a final copy of the Merger Agreement reflecting the
agreed terms and Willkie Farr distributed to Skadden a final
copy of the related Company Disclosure Schedule.
On September 11, 2011, the Companys board of
directors met telephonically. Also present at the meeting were
representatives of the Company, Willkie Farr and Evercore.
Following a brief update by Mr. Schwartz on the recent
developments regarding the recent and projected underperformance
of certain of the Companys business units,
Messrs. Perelman, Schwartz, Bevins, Dawson and Taub excused
themselves from the meeting. Mr. Meister continued the
meeting and stated that the special committee found the Merger
Agreement, the merger and the other transactions contemplated by
the Merger Agreement to be advisable, fair to and in the best
interests of the stockholders of the Company other than Holdings
and its affiliates and recommended that the Companys board
of directors approve
28
the Merger Agreement, the merger and the other transactions
contemplated by the Merger Agreement. Representatives of
Evercore then reviewed with the directors present its financial
analyses of the proposed merger consideration. Representatives
of Willkie Farr then provided an overview of the transaction,
including (i) a summary of key terms in the Merger
Agreement, (ii) an overview of the closing conditions such
as stockholder approvals that would be required for the merger
and (iii) the no-shop and fiduciary
out provisions that would apply in the event the Company
received a superior proposal or certain intervening events
occurred. After further discussion among the Companys
board of directors regarding the fairness of the proposal and
proposed terms, the Companys board of directors (other
than Messrs. Perelman, Schwartz, Bevins, Dawson and Taub,
each of whom abstained from the vote) (i) determined that
the Merger Agreement, the merger and the other transactions
contemplated by the Merger Agreement were advisable, fair to and
in the best interests of the stockholders of the Company (other
than Holdings and its affiliates), (ii) approved and
adopted the Merger Agreement, the merger and the other
transactions contemplated by the Merger Agreement and
(iii) recommended that the stockholders approve the Merger
Agreement, the merger and the other transactions contemplated by
the Merger Agreement.
Later on September 11, 2011, the parties exchanged executed
copies of the Merger Agreement.
Purposes
and Reasons for the Merger; Position of the Company as to
Fairness of the Merger; Recommendation of the Special Committee
and of our Board of Directors
Both the special committee and the Companys board of
directors believe, based on their consideration of the factors
relating to the substantive and procedural fairness described
below, the Merger Agreement and the merger are fair to, and in
the best interests of, the unaffiliated stockholders. The
Companys purpose and reasons for undertaking the merger at
this time are to enable stockholders (other than the Holdings
Investors) to realize the value of their investment in the
Company in cash at a favorable price.
In the course of reaching its determination and making its
recommendations, the special committee considered information
with respect to the Companys financial condition, results
of operations, businesses, competitive position and business
strategy, on both a historical and prospective basis, as well as
current industry, economic and market conditions and trends. The
special committee also considered the following factors as being
generally positive or favorable, each of which the special
committee believed supported its determination and
recommendations:
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the current and historical market prices of the Companys
common stock, including the fact that the per share merger
consideration of $25.00 represents a premium of
(i) approximately 47.4% over the closing price of $16.96 on
June 10, 2011, the last trading day prior to the public
announcement of the Holdings proposal; and
(ii) approximately 22.7% over the closing price of $20.37
on September 9, 2011, the last trading day prior to the
announcement of the Merger Agreement; in this regard, the
special committee was aware that the $25 per share merger
consideration was lower than the closing and average prices for
the common stock during certain of the historical periods listed
in the table in the section entitled
Special
FactorsOpinion of Evercore Group L.L.C.Implied Offer
Price Premium Analysis
;
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the current volatile state of the economy and the general
uncertainty surrounding forecasted economic conditions in both
the near-term and the long-term, generally as well as within the
industries in which the Company operates;
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29
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the special committees consideration that the benefit of
continuing as an independent public company would not be as
valuable as the merger consideration being offered because of
the potential risks and uncertainties associated with the future
prospects of the Company, particularly in light of the ongoing
decline in certain of the Companys businesses and more
recent adverse developments in certain businesses including
increased competition and regulatory risk as well as the risk
that the Company might incur an impairment charge in the future;
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the special committees consideration of the Companys
highly leveraged capital structure and the significant risks
relating to refinancing the Companys existing debt,
particularly in light of the volatile state of the debt
financing markets, which the special committee believed would
persist, and the risks to the Companys business;
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that the Committee was successful in not only maintaining the
proposal despite deteriorating market conditions, but also that
it was able to increase the merger consideration from that
initially proposed by Holdings;
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the fact that the Companys stockholders (other than
Holdings and its affiliates) will receive cash for their shares
and will therefore have immediate liquidity and receive certain
value for their shares;
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the presentation by Evercore to the special committee on
September 10, 2011 and the oral opinion delivered by
Evercore to the special committee, which was subsequently
confirmed by delivery of a written opinion dated
September 10, 2011, that, as of such date and based upon
and subject to the assumptions made, matters considered and
limitations on the scope of review undertaken by Evercore as set
forth in its written opinion, the per share merger consideration
of $25.00 was fair, from a financial point of view, to the
holders of shares of common stock (other than Holdings and its
affiliates), as more fully described in the section entitled
Special FactorsOpinion of Evercore Group
L.L.C.
;
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the financing commitment provided to Holdings in connection with
the merger and the fact that such financing was committed prior
to the execution of the Merger Agreement;
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the belief by the special committee that, based on its
consideration of, and discussion with its advisors concerning,
other potential strategic options, the merger consideration
being offered was the most favorable price that could be
obtained and that further negotiation ran the risk that Holdings
might determine to revoke its offer and abandon the transaction
altogether, in which event the Companys stockholders would
lose the opportunity to accept the premium being offered and
there would likely be a substantial drop in the stock price in
light of abandonment of the transaction, the prospects of the
Company as reflected in the financial projections that had been
presented to the special committee and Evercore by management of
the Companys operating subsidiaries and recent declines in
the market prices of securities generally;
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the terms of the Merger Agreement, including:
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the requirement that the Merger Agreement must be approved by
the holders of a majority of the outstanding common stock of the
Company, other than shares held by Holdings or any of its
affiliates;
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30
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the limited termination rights available to the purchasers;
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the limited representations and warranties given by the Company
and the exclusion of matters known by any dual
employee;
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the inclusion of provisions that permit the Companys board
of directors, under specified circumstances, to change or
withdraw its recommendation with respect to the Merger Agreement
and the merger and respond to unsolicited proposals to acquire
the Company to the extent the Companys board of directors
believes in good faith that failure to do so would be
inconsistent with its fiduciary duties; and
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the other terms and conditions of the Merger Agreement, as
discussed in the section entitled
The Merger
Agreement
, which the special committee, after
consulting with its legal counsel, considered to be reasonable
and consistent with precedents it deemed relevant;
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the likelihood that the merger would be completed, and that it
would be completed in a reasonably prompt time frame, based on
the limited conditions precedent to each partys obligation
to effect the merger;
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the fact that the Purchasers obligation to complete the
merger is not conditioned upon receipt of financing; and
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the rights of stockholders who vote against the merger to
dissent from the merger and demand appraisal of the fair value
of their shares of common stock.
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In addition to the foregoing factors which the special committee
considered as being generally positive or favorable in making
its determination and recommendations in favor of the merger,
the special committee also considered that its determination and
recommendations were supported by its belief that there were
limited strategic alternatives for enhancing value for the
Companys stockholders (other than Holdings and its
affiliates), especially in light of Holdings statement
that it would not consider selling its stake in the Company or
vote in favor of any such alternative transaction, as well as
the risks and uncertainties to the Companys stockholders
associated with such alternatives.
The special committee also considered a number of factors that
are discussed below relating to the procedural safeguards that
it believes were and are present to ensure the fairness of the
merger. The special committee believes these factors support its
determinations and recommendations and provide assurance of the
procedural fairness of the merger to the Companys
stockholders who are unaffiliated with Holdings:
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the Merger Agreement must be approved by the affirmative vote of
(i) the holders of at least a majority of all outstanding
shares of common stock, and (ii) the holders of at least a
majority of all outstanding common stock of the Company, other
than shares held by Holdings or its affiliates, as discussed in
the section entitled
The Special MeetingVote
Required
;
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the fact that the Merger Agreement cannot be amended, nor its
provisions waived, without the approval of the special committee;
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31
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the authority granted to the special committee by the
Companys board of directors to negotiate the terms of the
definitive agreement with respect to the Holdings proposal, or
to determine not to pursue any agreement with Holdings;
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the special committee consists solely of independent and
disinterested directors. The members of the special committee
(i) are not employees of the Company or any of its
subsidiaries, (ii) are not affiliated with Holdings or its
affiliates, and (iii) have no financial interest in the
merger that is different from that of the Companys
unaffiliated stockholders, other than as discussed in the
section entitled
Special FactorsInterests of the
Companys Directors and Executive Officers in the
Merger
;
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the special committee held numerous meetings and met regularly
to discuss and evaluate the Holdings proposal, and was advised
by independent financial and legal advisors, and each member of
the special committee was actively engaged in the process on a
regular basis;
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the special committee retained and received the advice of
Evercore as its independent financial advisor;
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the opinion, dated September 10, 2011, of Evercore to the
special committee as described above and as more fully described
in the section entitled
Special FactorsOpinion of
Evercore Group L.L.C.
; and
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the recognition by the special committee that it had no
obligation to recommend the approval of the merger or any other
transaction.
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In the course of reaching its determinations and making its
recommendations, the special committee also considered the
following risks and other factors concerning the Merger
Agreement and the merger as being generally negative or
unfavorable:
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Holdings would not agree to a proposed increase in the merger
consideration beyond the one dollar increase from its initial
proposal;
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the lack of alternatives available to the Company other than to
reject the proposed transaction and remain a public company
given (i) the special committees views, based on
discussions with Evercore, that divestitures of portions of the
Companys businesses would not likely generate significant
value for the Companys shareholders, and (ii) the
special committees belief that a transaction that did not
involve Holdings could not be successful given Holdings
statement that it would not sell its interest or vote in favor
of an alternative transaction;
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the fact that the Companys stockholders (other than
Holdings and its affiliates) will have no ongoing equity
participation in the Company following the merger, and that such
stockholders will cease to participate in the Companys
future earnings or growth, if any, and will not participate in
any potential future sale of the Company to a third party or any
potential recapitalization which could include a dividend to
stockholders;
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the possibility that Holdings could realize significant returns
on its equity investment in the surviving corporation following
the merger;
|
32
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the possibility that Holdings could sell some or all of the
Company following the merger to one or more purchasers at a
valuation higher than that being paid in the merger;
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the risk that, while the merger is expected to be completed,
there can be no assurance that all conditions to the
parties obligations to complete the merger will be
satisfied, and as a result, it is possible that the merger may
not be completed even if approved by the Companys
stockholders and the holders of a majority of the outstanding
shares of common stock other than Holdings and its
affiliates; and
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the risks and costs to the Company if the merger does not close,
including the potential effect of the diversion of management
and employee attention from the Companys business and the
substantial expenses which the Company will have incurred,
including in connection with the related litigation.
|
The special committee also considered the financial analyses and
the opinion of Evercore, among other factors considered, in
reaching its determination as to the fairness of the
transactions contemplated by the Merger Agreement. These
analyses, including a discussion of the Company financial
projections that served as a basis for certain of the valuation
analyses, are summarized below in the sections entitled
Special FactorsOpinion of Evercore Group
L.L.C. and Special FactorsProjected Financial
Information
. As part of making its determination
regarding the fairness of the merger, the special committee
relied on the view of management of the Companys operating
subsidiaries that the financial projections were reasonable in
light of recent events impacting the Companys businesses,
the refinancing risks relating to its existing indebtedness and
general negative economic conditions. In this regard, while the
special committee was aware that the Companys net income
had increased in the quarter ended June 30, 2011 over the
prior years quarter, the special committee did not
consider this fact to be significant in light of the decline in
net income in the six months ended June 30, 2011 from the
comparable six months of 2010 and the lowered financial
projections that had been presented to the special committee and
Evercore by management of the Companys operating
subsidiaries.
While the special committee considered potentially positive and
negative factors, it concluded that, overall, the potentially
positive factors outweighed the potentially negative factors,
and at a meeting held on September 10, 2011, the special
committee unanimously:
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determined that the Merger Agreement, the merger and the other
transactions contemplated by the Merger Agreement are fair to,
advisable and in the best interests of the Companys
stockholders (other than Holdings and its affiliates); and
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approved resolutions recommending that the Companys board
of directors approve and recommend to the Companys
stockholders that they approve the Merger Agreement and the
merger as contemplated by the Merger Agreement.
|
In addition, the Companys board of directors believes that
the Merger Agreement and the merger are both substantively and
procedurally fair to the Companys stockholders, including
the stockholders (other than Holdings and its affiliates).
33
In reaching these determinations, our board of directors
considered and adopted:
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the special committees analysis, conclusions, and
unanimous determination that the Merger Agreement, the merger
and the other transactions contemplated by the Merger Agreement
were fair to, advisable and in the best interests of the
Companys stockholders (other than Holdings and its
affiliates); and
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the special committees unanimous recommendation that the
Companys board of directors approve the Merger Agreement,
submit the Merger Agreement to the Companys stockholders
for approval, and recommend that the stockholders vote for the
approval of the Merger Agreement and the merger as contemplated
by the Merger Agreement.
|
In making this determination, the Companys board of
directors also considered a number of other factors, including
the following material factors:
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the special committees having retained and received advice
from its independent financial and legal advisors;
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that the special committee consists solely of independent and
disinterested directors. The members of the special committee
(i) are not employees of the Company or any of its
subsidiaries, (ii) are not affiliated with Holdings or its
affiliates, and (iii) have no financial interest in the
merger that is different from that of the Companys
unaffiliated stockholders, other than as discussed in the
section entitled
Special FactorsInterests of the
Companys Directors and Executive Officers in the
Merger
;
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the process undertaken by the special committee and its advisors
in connection with evaluating the merger, as described above in
the section entitled
Special FactorsBackground of
the Merger
;
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the opinion, dated September 10, 2011, of Evercore to the
special committee as described above and as more fully described
in the sections entitled
Special FactorsOpinion
of Evercore Group L.L.C.
; and
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their own views that the benefit of continuing as an independent
public company would not be as valuable as the merger
consideration being offered because of the potential risks and
uncertainties associated with the future prospects of the
Company.
|
The foregoing discussion of the information and factors
considered by the special committee and by the Companys
board of directors is not intended to be exhaustive, but
includes the material factors considered by the special
committee and the Companys board of directors,
respectively, including the substantive and procedural factors
considered by the special committee and the Companys board
of directors discussed above. In view of the wide variety of
factors considered by the special committee and by the
Companys board of directors in evaluating the Merger
Agreement and the merger, neither the special committee nor the
Companys board of directors found it practicable, or
attempted, to quantify, rank or otherwise assign relative
weights to the foregoing factors in reaching their respective
conclusion. In addition, individual members of the special
committee and of the Companys board of directors may have
given different weights to different factors and may have viewed
some factors more positively or negatively than others.
34
Other than as described in this proxy statement, the
Companys board of directors is not aware of any firm offer
by any other person during the prior two years for a merger or
consolidation of the Company with another company, the sale or
transfer of all or substantially all of the Companys
assets or a purchase of the Companys securities that would
enable such person to exercise control of the Company.
Evercore
Presentation to the Special Committee on August 17,
2011
On August 17, 2011, Evercore discussed with the special
committee the considerations and financial analyses relating to
a hypothetical sale for cash of selected assets of HCHC to a
company in HCHCs industry. Evercores analyses
assumed that the HCHC assets would be sold on a cash-free and
debt-free basis for 100% cash consideration, for gross proceeds
ranging from $1,500 million to $1,800 million. Based
on these and other assumptions, Evercore presented, among other
things, (i) an illustrative range of potential run-rate
cost synergies resulting from the hypothetical transaction of
$50 million to $150 million, (ii) an illustrative
accretion/dilution analysis for the hypothetical purchaser and
(iii) the potential net cash proceeds to the Company, the
Companys potential pro forma capital structure and the
potential pro forma value per share of common stock as a result
of the transaction. This latter analysis indicated
(i) potential net cash proceeds to the Company of
$1,483 billion to $1,672 billion and (ii) a
potential pro forma value per share of common stock in the range
of $19.46 to $37.83. Evercore noted that there was significant
execution risk involved in such a transaction and that there was
a lack of historical interest on the part of the other company
in such an acquisition. The special committee discussed with its
advisors whether such a transaction would require a shareholder
vote, whether it would trigger the Companys debt covenants
and whether such a transaction could be accomplished in a
tax-efficient manner.
Opinion
of Evercore Group L.L.C.
On September 10, 2011, at a meeting of the special
committee, Evercore delivered to the special committee its oral
opinion, which was subsequently confirmed by delivery of a
written opinion dated September 10, 2011, that, as of such
date and based upon and subject to assumptions made, matters
considered and limitations on the scope of review undertaken by
Evercore as set forth in its opinion, the merger consideration
was fair, from a financial point of view, to the holders of
shares of common stock (other than Holdings and its affiliates)
entitled to receive such merger consideration.
The full text of Evercores written opinion, dated
September 10, 2011, which sets forth, among other things,
the procedures followed, assumptions made, matters considered
and limitations on the scope of review undertaken in rendering
its opinion, is attached as Annex B to this Proxy Statement
and is incorporated by reference in its entirety into this Proxy
Statement. You are urged to read Evercores opinion
carefully and in its entirety. Evercores opinion was
directed to the special committee and addresses only the
fairness, from a financial point of view, of the merger
consideration to be received by holders of shares of common
stock (other than Holdings and its affiliates) entitled to
receive such merger consideration. The opinion does not address
any other aspect of the merger and does not constitute a
recommendation to the special committee or to any other person
in respect of the merger, including as to how any holder of
shares of common stock should vote or act in respect of the
merger. Evercores opinion does not address the relative
merits of the merger as compared to other business or financial
strategies that might be available to the Company, nor does it
address the underlying business decision of the Company or the
special committee to engage in the merger.
35
In connection with rendering its opinion, Evercore, among other
things:
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|
reviewed certain publicly available business and financial
information relating to the Company that Evercore deemed to be
relevant;
|
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|
reviewed certain non-public historical financial statements and
other non-public historical financial and operating data
relating to the Company prepared and furnished to Evercore by
management of the Company and its operating divisions;
|
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|
reviewed certain non-public projected financial data relating to
the Company under alternative business assumptions prepared and
furnished to Evercore by management of the Company and its
operating divisions;
|
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|
reviewed certain non-public projected operating data relating to
the Company prepared and furnished to Evercore by management of
the Company and its operating divisions;
|
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|
discussed the past and current operations, financial projections
and current financial condition of the Company with management
of the Company and its operating divisions (including their
views on the risks and uncertainties of achieving such
projections);
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|
reviewed the reported prices and the historical trading activity
of common stock;
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|
compared the financial performance of the Company and its stock
market trading multiples with those of certain other publicly
traded companies that Evercore deemed relevant;
|
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|
compared the financial performance of the Company and the
valuation multiples relating to the merger with those of certain
other transactions that Evercore deemed relevant;
|
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|
reviewed a draft, dated September 8, 2011, of the Merger
Agreement, referred to herein as the Draft
Agreement; and
|
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|
performed such other analyses and examinations and considered
such other factors that Evercore deemed appropriate.
|
For purposes of its analysis and opinion, Evercore assumed and
relied upon, without undertaking any independent verification
of, the accuracy and completeness of all of the information
publicly available, and all of the information supplied or
otherwise made available to, discussed with, or reviewed by
Evercore, and Evercore assumed no liability therefor. With
respect to the projected financial data relating to the Company
and its operating divisions referred to above, Evercore has
assumed that they were reasonably prepared on bases reflecting
the best then-available estimates and good faith judgments of
the respective managements of the Company and its operating
divisions as to the future financial performance of the Company
and its operating divisions under the alternative business
assumptions reflected therein. Management of the Company advised
Evercore that the assumptions regarding the Companys
expected refinancing plans for HCHC as provided to Evercore by
the Companys management in September 2011, referred to
herein as the Refinancing Assumptions, reflect the
best estimates available through the date of the opinion and
good faith judgments of management of the Company as to the
matters covered thereby. Management of HCHC have advised
36
Evercore that the projected financial data for HCHC provided to
Evercore by HCHCs management in July 2011, referred to
herein as the HCHC Projections, reflect the best
estimates available through the date of the opinion and good
faith judgments of management of HCHC as to the future financial
performance of HCHC. Management of Mafco Flavors has advised
Evercore that the projected financial data for Mafco Flavors
provided to Evercore by Mafco Flavors management in June
2011 and reaffirmed in July 2011, referred to herein as the
Mafco Flavors Projections, reflect the best
estimates available through the date of the opinion and good
faith judgments of management of Mafco Flavors as to the future
financial performance of Mafco Flavors. With the consent of the
special committee, Evercore relied on the Refinancing
Assumptions, the HCHC Projections and the Mafco Flavors
Projections for purposes of its analysis and opinion. Evercore
expressed no view as to any projected financial data relating to
the Company, HCHC or Mafco Flavors or the assumptions on which
they are based. See
Special FactorsProjected
Financial Information
.
For purposes of rendering its opinion, Evercore assumed, in all
respects material to its analysis, that the representations and
warranties of each party contained in the Merger Agreement were
true and correct, that each party would perform all of the
covenants and agreements required to be performed by it under
the Merger Agreement and that all conditions to the consummation
of the merger would be satisfied without material waiver or
modification thereof. Evercore further assumed that all
governmental, regulatory or other consents, approvals or
releases necessary for the consummation of the merger would be
obtained without any material delay, limitation, restriction or
condition that would have an adverse effect on the Company or
the consummation of the merger or materially reduce the benefits
to the holders of common stock of the merger. Evercore also
assumed, at the direction of the special committee, that the
executed Merger Agreement would not differ in any material
respect from the Draft Agreement reviewed by Evercore.
Evercore did not make nor assume any responsibility for making
any independent valuation or appraisal of the assets or
liabilities of the Company, nor was Evercore furnished with any
such appraisals, nor did Evercore evaluate the solvency or fair
value of the Company under any state or federal laws relating to
bankruptcy, insolvency or similar matters. Evercores
opinion was necessarily based upon information made available to
it as of the date of its opinion and financial, economic, market
and other conditions as they existed and as could be evaluated
on the date of its opinion. It should be understood that
subsequent developments may affect Evercores opinion and
that Evercore does not have any obligation to update, revise or
reaffirm its opinion.
Evercore was not asked to pass upon, and expressed no opinion
with respect to, any matter other than the fairness to the
holders of common stock (other than Holdings and its
affiliates), from a financial point of view, of the merger
consideration. Evercore did not express any view on, and its
opinion did not address, the fairness of the proposed
transaction to, or any consideration received in connection
therewith by, the holders of any other securities, creditors or
other constituencies of the Company, nor as to the fairness of
the amount or nature of any compensation to be paid or payable
to any of the officers, directors or employees of the Company,
or any class of such persons, whether relative to the merger
consideration or otherwise. Evercore assumed that any amendment
to the Merger Agreement will not amend or modify the structure
of the transaction in a manner material to its analysis.
Evercores opinion did not address the relative merits of
the merger as compared to other business or financial strategies
that might be available to the Company, not did it address the
underlying business decision of the Company to engage in the
merger. In arriving at its opinion, Evercore was not authorized
to solicit, and did not solicit, interest from any third party
with respect to the acquisition of any or all of the common
stock or any business combination or other extraordinary
transaction involving the Company. Evercores letter, and
its opinion, did not constitute
37
a recommendation to the board of directors or to any other
persons in respect of the merger, including as to how any holder
of shares of common stock should vote or act in respect of the
merger. Evercore expressed no opinion as to the price at which
shares of the Company would trade at any time. Evercores
opinion noted that Evercore is not a legal, regulatory,
accounting or tax expert and that Evercore assumed the accuracy
and completeness of assessments by the Company and its advisors
with respect to legal, regulatory, accounting and tax matters.
Except as described above, the special committee imposed no
other instruction or limitation on Evercore with respect to the
investigations made or the procedures followed by Evercore in
rendering its opinion. Evercores opinion was only one of
many factors considered by the special committee in its
evaluation of the merger and should not be viewed as
determinative of the views of the special committee with respect
to the merger or the merger consideration payable in the merger.
Set forth below is a summary of the material financial analyses
reviewed by Evercore with the special committee on
September 10, 2011 in connection with rendering its
opinion. The following summary, however, does not purport to be
a complete description of the analyses performed by Evercore.
The order of the analyses described and the results of these
analyses do not represent relative importance or weight given to
these analyses by Evercore. Except as otherwise noted, the
following quantitative information, to the extent that it is
based on market data, is based on market data that existed on or
before September 9, 2011 (the last trading day prior to
September 10, 2011, the date on which the special committee
recommended approval of the merger), and is not necessarily
indicative of current market conditions.
The following summary of financial analyses includes
information presented in tabular format. These tables must be
read together with the text of each summary in order to
understand fully the financial analyses. The tables alone do not
constitute a complete description of the financial analyses.
Considering the tables below without considering the full
narrative description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of Evercores
financial analyses.
Implied Offer Price Premium Analysis
Evercore considered historical data with regard to (i) the
closing stock prices of common stock as of September 9,
2011 and June 10, 2011 (the last trading date prior to the
submission by Holdings of its initial proposal on June 13,
2011), (ii) the average closing stock prices during the
periods one week, two weeks, one month, two months, three
months, six months, one year and two years prior to and
including June 10, 2011, (iii) the closing stock
prices of common stock on the dates one week, two weeks, one
month, two months, three months, six months, one year and two
years prior to and including June 10, 2011, and
(iv) the intraday high and low trading prices during the
52-week period ending on and including June 10, 2011.
38
The following historical common stock price analysis was
presented to the special committee to provide it with background
information and perspective with respect to the historical share
price of common stock relative to the per share merger
consideration of $25.00:
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Average
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Historical
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Closing
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Closing
|
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Prices
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Premium/(Discount)
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Prices
|
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Premium/(Discount)
|
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|
for
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Based on
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for the
|
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|
Based on
|
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|
the Period
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Merger Consideration
|
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Period
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|
Merger Consideration
|
Current Price (9/9/11)
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$
|
20.37
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|
|
|
22.7
|
%
|
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|
$
|
20.37
|
|
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|
22.7
|
%
|
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Unaffected
Price (6/10/11)
|
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$
|
16.96
|
|
|
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|
47.4
|
%
|
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|
$
|
16.96
|
|
|
|
|
47.4
|
%
|
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|
|
|
|
|
|
|
|
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One Week
Prior to
6/10/11
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$
|
18.21
|
|
|
|
|
37.3
|
%
|
|
|
$
|
18.97
|
|
|
|
|
31.8
|
%
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
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|
Two Weeks
Prior to
6/10/11
|
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|
$
|
19.28
|
|
|
|
|
29.6
|
%
|
|
|
$
|
21.52
|
|
|
|
|
16.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
One Month
Prior to
6/10/11
|
|
|
$
|
20.96
|
|
|
|
|
19.3
|
%
|
|
|
$
|
22.66
|
|
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Two Months
Prior to
6/10/11
|
|
|
$
|
22.63
|
|
|
|
|
10.5
|
%
|
|
|
$
|
25.24
|
|
|
|
|
(1.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
Three Months
Prior to
6/10/11
|
|
|
$
|
23.48
|
|
|
|
|
6.5
|
%
|
|
|
$
|
24.96
|
|
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
Six Months
Prior to
6/10/11
|
|
|
$
|
23.80
|
|
|
|
|
5.1
|
%
|
|
|
$
|
24.45
|
|
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Year
Prior to
6/10/11
|
|
|
$
|
25.03
|
|
|
|
|
(0.1
|
)%
|
|
|
$
|
28.27
|
|
|
|
|
(11.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Two Years
Prior to
6/10/11
|
|
|
$
|
26.52
|
|
|
|
|
(5.7
|
)%
|
|
|
$
|
25.74
|
|
|
|
|
(2.9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
52-Week
High
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30.77
|
|
|
|
|
(18.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52-Week
Low
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16.77
|
|
|
|
|
49.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis
of Implied Transaction Multiples at Offer Price
Based on the HCHC Projections and the Mafco Flavors Projections,
Evercore calculated and compared the ratios of Total Enterprise
Value, referred to herein as TEV (which represents market
39
capitalization plus total outstanding debt, less cash and cash
equivalents), based on the per share merger consideration of
$25.00, to Adjusted EBITDA (which represents earnings before
interest, taxes, depreciation and amortization, or EBITDA,
adjusted to exclude asset impairment charges, gains on the
extinguishment of debt, extraordinary gains and the settlement
of contingent claims) for each of (i) the last four
quarters, referred to herein as LFQ, as of June 30, 2011,
(ii) estimated calendar year 2011 and (iii) estimated
calendar year 2012.
|
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|
|
|
|
|
|
|
|
Company Adjusted
|
|
|
TEV/(based on
|
|
|
|
EBITDA
|
|
|
merger consideration)
|
|
Period
|
|
(in millions)
|
|
|
Adjusted EBITDA
|
|
|
LFQ
|
|
$
|
445
|
|
|
|
5.6
|
x
|
CY2011E
|
|
$
|
441
|
|
|
|
5.7
|
x
|
CY2012E
|
|
$
|
459
|
|
|
|
5.4
|
x
|
Analysis
of Selected Publicly Traded Companies
Evercore reviewed and compared certain financial and operating
information and measurements relating to the Company and its
operating divisions to corresponding information and
measurements of certain selected publicly traded companies that
may be deemed to be similar to the Company and its operating
divisions because they produce similar products or services, use
similar suppliers, compete for similar customers, operate in
similar geographic regions, or face similar competitive
pressures or industry dynamics. Evercore noted, however, that
none of the selected publicly traded companies is identical or
directly comparable to the Company or any of its operating
divisions.
As part of its analysis, Evercore calculated and analyzed the
multiple of TEV as of September 9, 2011 to 2012E EBITDA for
the selected companies and the multiple of TEV to 2012E Adjusted
EBITDA for the Company and its operating divisions,
respectively. The multiples for each of the selected companies
were calculated using the closing price of the selected
companies common stock on September 9, 2011 and were
based on, and derived from, publicly available filings, publicly
available research estimates published by independent equity
research analysts associated with various Wall Street firms and
financial data provided by FactSet Research Systems Inc. The
multiples for the Company and its operating divisions were
calculated using the per share merger consideration of $25.00
and were based on, and derived from, publicly available
information, the HCHC Projections and the Mafco Flavors
Projections.
40
The companies that Evercore deemed to have certain
characteristics similar to those of the Companys operating
divisions, and the range of implied multiples that Evercore
calculated, are set forth below:
TEV/2012E
EBITDA
|
|
|
|
The Company
(based on merger consideration)
|
|
|
5.4x
|
|
|
|
|
Harland Clarke Selected Companies
|
|
|
|
Deluxe Corporation
|
|
|
4.8x
|
Quad/Graphics, Inc.
|
|
|
3.3x
|
R.R. Donnelley & Sons Company
|
|
|
4.6x
|
|
|
|
|
Harland Financial Solutions Selected Companies
|
|
|
|
Fidelity National Information Services, Inc.
|
|
|
6.7x
|
Fiserv, Inc.
|
|
|
6.9x
|
Jack Henry & Associates, Inc.
|
|
|
7.4x
|
Temenos Group AG
|
|
|
7.7x
|
Wolters Kluwer N.V.
|
|
|
6.8x
|
|
|
|
|
Scantron Selected Companies
|
|
|
|
Deluxe Corporation
|
|
|
4.8x
|
Pearson PLC
|
|
|
9.2x
|
R.R. Donnelley & Sons Company
|
|
|
4.6x
|
Scholastic Corporation
|
|
|
5.0x
|
|
|
|
|
Mafco Selected Companies
|
|
|
|
Givaudan S.A.
|
|
|
10.2x
|
Huabao International Holdings Ltd.
|
|
|
6.6x
|
International Flavors & Fragrances Inc.
|
|
|
9.0x
|
Sensient Technologies Corporation
|
|
|
7.8x
|
Symrise AG
|
|
|
7.9x
|
T. Hasegawa Co., Ltd.
|
|
|
5.9x
|
Takasago International Corporation
|
|
|
5.7x
|
|
|
|
|
Evercore then applied a range of selected multiples of 5.0x to
5.5x 2012E Adjusted EBITDA, which was derived from the analysis
of selected publicly traded companies described above as well as
the relative contributions to the Companys 2012E Adjusted
EBITDA by each of its operating divisions, to the corresponding
financial data for the Company, which financial data was based
on the HCHC Projections and the Mafco Flavors Projections. By
way of reference, HCHC contributed approximately 64%, Harland
Financial Solutions contributed approximately 19%, Scantron
contributed approximately 10% and Mafco Flavors contributed
approximately 7% to the Companys 2012E
41
Adjusted EBITDA. Thus, in deriving the range of multiples of
5.0x to 5.5x, Evercore gave more weight to the multiples derived
for the HCHC Selected Companies than to the multiples derived
for the Harland Financial Solutions Selected Companies, the
Scantron Selected Companies or the Mafco Selected Companies.
Evercore did not average or calculate the mean or median
multiples for each category of selected companies, nor did
Evercore simply average or calculate the mean or median
multiples for the selected companies as a group. This analysis
indicated the following implied per share equity reference range
for the Company, as compared to the merger consideration:
|
|
|
|
|
|
|
Implied Per Share Equity
|
|
|
2012E Adjusted EBITDA
|
|
Reference Range for the
Company
|
|
Merger Consideration
|
$459 million
|
|
$14.64-$26.42
|
|
$25.00
|
Present
Value of Future Stock Price Analysis
Evercore performed an illustrative analysis of the present value
of the future stock price of the Company, which is designed to
provide an indication of the present value of a theoretical
future value of a companys equity as a function of such
companys estimated future EBITDA and its assumed trailing
TEV/EBITDA multiple. For this analysis, Evercore used the HCHC
Projections, the Mafco Flavors Projections and the Refinancing
Assumptions for the fiscal year ending December 31, 2014.
For this analysis, Evercore first multiplied the Adjusted EBITDA
estimate by a range of trailing TEV/Adjusted EBITDA multiples of
5.0x to 5.5x and next subtracted the debt and added cash and
cash equivalents using estimates prepared by management of HCHC
and Mafco Flavors. Evercore then calculated the implied per
share future equity values for the shares of common stock at the
end of fiscal year 2014 and discounted those values to
June 30, 2011 using an equity discount rate range of 22.5%
to 27.5%. The discount rate range was chosen by Evercore based
on its professional judgment and experience and upon an analysis
of the equity cost of capital calculated using the capital asset
pricing model of the Company and the companies identified above
under the caption Analysis of Selected Publicly Traded
Companies, the debt level of the Company and the relative
contributions to the Companys estimated Adjusted EBITDA by
each of its operating divisions. In particular, the discount
rate range chosen by Evercore reflected the highly leveraged
nature of the Company as well as the small capitalization of the
Company. This analysis indicated the following implied per share
equity reference range as of June 30, 2011 for the Company,
as compared to the merger consideration.
|
|
|
|
|
|
|
Implied Per Share Equity
|
|
|
2014E Adjusted EBITDA
|
|
Reference Range for the
Company
|
|
Merger Consideration
|
$482 million
|
|
$19.45-$28.45
|
|
$25.00
|
Selected
Precedent Transactions Analysis
Evercore performed an analysis of selected transactions to
compare multiples paid in other transactions to the multiples
implied in the merger. Evercore analyzed a total of 81 merger
and acquisition transactions involving the acquisition of
companies in the printing services, financial solutions,
education technology and flavor and fragrances industries.
Evercore selected transactions in which the operations of the
target were comparable to those of the Company and its operating
divisions. In selecting such transactions, Evercore varied the
transaction size minimum and the date range by sector to
encompass a reasonable sample set of transactions, being mindful
that transactions which occurred in the past are less relevant
to the current industry dynamics. Evercore noted that
42
none of the selected transactions or the companies that
participated in the selected transactions are directly
comparable to the Company or the merger.
The 81 transactions included the following acquisitions since
1999 for more than a 50% ownership stake in targets valued at
more than $100 million that provide printing services and
printing-related services; this set of transactions was used in
relation to HCHC and Scantron:
Selected
Precedent TransactionsPrinting Services
|
|
|
|
|
Date
|
|
|
|
|
Announced
|
|
Target
|
|
Acquiror
|
|
2/23/10
|
|
Bowne & Co., Inc.
|
|
RR Donnelley & Sons Company
|
1/25/10
|
|
World Color Press Inc.
|
|
Quad/Graphics, Inc.
|
02/27/08
|
|
Pro Line Printing, Inc.
|
|
RR Donnelley & Sons Company
|
2/12/08
|
|
Phoenix Color Corp.
|
|
Visant Corporation
|
10/16/07
|
|
Cardinal Brands, Inc.
|
|
RR Donnelley & Sons Company
|
07/17/07
|
|
Commercial Envelope Manufacturing Co., Inc.
|
|
Cenveo, Inc.
|
06/14/07
|
|
Madison/Graham ColorGraphics, Inc.
|
|
Cenveo, Inc.
|
01/03/07
|
|
Von Hoffmann
|
|
RR Donnelley & Sons Company
|
12/27/06
|
|
Cadmus Communications Corporation
|
|
Cenveo, Inc.
|
12/20/06
|
|
John H. Harland Company
|
|
M & F Worldwide Corp.
|
12/20/06
|
|
Perry Judds Holdings Incorporated
|
|
RR Donnelley & Sons Company
|
10/31/06
|
|
Banta Corporation
|
|
RR Donnelley & Sons Company
|
10/31/05
|
|
Clarke American Checks
|
|
M & F Worldwide Corp.
|
5/17/04
|
|
New England Business Service, Inc.
|
|
Deluxe Corporation
|
11/8/03
|
|
Moore Wallace Incorporated
|
|
RR Donnelley & Sons Company
|
01/20/03
|
|
Wallace Computer Services, Inc.
|
|
Moore Wallace Incorporated
|
6/20/00
|
|
The Reynolds and Reynolds Company Information Solutions Group
|
|
The Carlyle Group L.P.
|
5/15/00
|
|
Cunningham Graphics International, Inc.
|
|
Automatic Data Processing, Inc.
|
1/15/00
|
|
American Business Products
|
|
Mail-Well, Inc.
|
9/30/99
|
|
At-A-Glance
|
|
The Mead Corporation
|
7/19/99
|
|
World Color Press Inc.
|
|
Quebecor Printing
|
7/14/99
|
|
The Merrill Corporation
|
|
DLJ Merchant Banking Partners
|
6/29/99
|
|
Big Flower Holdings Inc.
|
|
Thomas H. Lee Partners, L.P.
|
4/1/99
|
|
The Mack Printing Group
|
|
Cadmus Communications Corporation
|
The 81 transactions included the following acquisitions since
2000 for more than a 50% ownership stake in targets valued at
more than $25 million that develop enterprise software and
43
provide related services to financial institutions; this set of
transactions was used in relation to Harland Financial Solutions:
Selected
Precedent TransactionsFinancial Solutions
|
|
|
|
|
Date
|
|
|
|
|
Announced
|
|
Target
|
|
Acquiror
|
|
06/29/11
|
|
CashEdge Inc.
|
|
Fiserv, Inc.
|
06/27/11
|
|
Fundtech Ltd.
|
|
S1 Corporation
|
03/24/11
|
|
Mortgagebot LLC
|
|
Davis + Henderson Corporation
|
03/31/09
|
|
Metavante Technologies, Inc.
|
|
Fidelity National Information Services, Inc.
|
06/27/07
|
|
eFunds Corporation
|
|
Fidelity National Information Services, Inc.
|
10/14/06
|
|
Open Solutions Inc.
|
|
The Carlyle Group L.P.
|
08/28/06
|
|
P&H Solutions, Inc.
|
|
Transaction System Architects, Inc.
|
01/09/06
|
|
Verus Financial Management
|
|
Sage Group
|
09/28/05
|
|
Mortgagebot LLC
|
|
Spectrum Equity Investors
|
09/15/05
|
|
BIS LP Inc.
|
|
Open Solutions Inc.
|
09/14/05
|
|
Certegy Inc.
|
|
Fidelity National Financial, Inc.
|
07/12/05
|
|
The MacGregor Group, Inc.
|
|
Investment Technology Group, Inc.
|
03/28/05
|
|
SunGard Data Systems Inc.
|
|
Consortium of Private Equity Firms
|
02/03/05
|
|
APPRO Systems, Inc.
|
|
Equifax Inc.
|
12/16/04
|
|
Bhc Investments, Inc.
|
|
Fidelity National Financial, Inc.
|
09/09/04
|
|
InterCept, Inc.
|
|
Fidelity National Financial, Inc.
|
05/17/04
|
|
NYCE Corporation
|
|
Metavante Corporation
|
04/26/04
|
|
London Bridge Software Holdings Limited
|
|
Fair Isaac Corporation
|
04/21/04
|
|
The Kirchman Corporation
|
|
Metavante Corporation
|
02/10/04
|
|
Aurum Technology, Inc.
|
|
Fidelity National Financial, Inc.
|
02/01/04
|
|
Concord EFS, Inc.
|
|
First Data Corporation
|
01/28/04
|
|
Sanchez Computer Associates, Inc.
|
|
Fidelity National Financial, Inc.
|
12/09/03
|
|
Systems & Computer Technology Corporation
|
|
SunGard Data Systems Inc.
|
11/14/02
|
|
Electronic Data Systems Corp
|
|
Fiserv, Inc.
|
05/15/00
|
|
Symitar Systems, Inc.
|
|
Jack Henry & Associates Inc.
|
03/06/00
|
|
Q-UP
Systems
|
|
S1 Corporation
|
The 81 transactions included the following acquisitions since
2005 for more than a 50% ownership stake in targets valued at
more than $25 million that develop software or digital
content or other technology enabled services for the education
industry; this set of transactions was used in relation to
Scantron:
Selected
Precedent TransactionsEducation Technology
|
|
|
|
|
Date
|
|
|
|
|
Announced
|
|
Target
|
|
Acquiror
|
|
8/16/11
|
|
Renaissance Learning, Inc.
|
|
Permira Advisers Ltd.
|
7/1/11
|
|
Blackboard Inc.
|
|
Providence Equity Partners
|
44
|
|
|
|
|
Date
|
|
|
|
|
Announced
|
|
Target
|
|
Acquiror
|
|
5/19/11
|
|
Kaplan Virtual Education (K-12 Assets)
|
|
K12 Inc.
|
4/26/11
|
|
Schoolnet, Inc.
|
|
Pearson plc
|
1/18/11
|
|
Tutorvista
|
|
Pearson plc
|
1/12/11
|
|
Presidium Inc.
|
|
Blackboard Inc.
|
1/5/11
|
|
GeoLearning, Inc
|
|
SumTotal Systems, Inc.
|
12/16/10
|
|
GlobalScholar
|
|
Harland Clarke Holdings Corp.
|
11/22/10
|
|
Wireless Generation, Inc.
|
|
News Corporation
|
11/16/10
|
|
The Administrative Assistants Ltd.
|
|
Pearson plc
|
11/2/10
|
|
The American Education Corporation
|
|
K12 Inc.
|
9/1/10
|
|
Learn.com, Inc.
|
|
Taleo Corporation
|
8/3/10
|
|
Americas Choice
|
|
Pearson plc
|
7/2/10
|
|
Wimba, Inc.
|
|
Blackboard Inc.
|
7/1/10
|
|
KC Distance Learning, Inc.
|
|
K12 Inc.
|
6/10/10
|
|
EducationCity, Ltd.
|
|
Archipelago Learning, Inc.
|
5/14/10
|
|
Elluminate, Inc.
|
|
Blackboard Inc.
|
3/25/10
|
|
PLATO Learning, Inc.
|
|
Thoma Bravo, LLC
|
5/1/09
|
|
ANGEL Learning, Inc.
|
|
Blackboard Inc.
|
4/3/09
|
|
SumTotal Systems, Inc.
|
|
Vista Equity Partners
|
5/14/07
|
|
eCollege.com
|
|
Pearson plc
|
10/12/05
|
|
WebCT, Inc.
|
|
Blackboard Inc.
|
Finally, the 81 transactions included the following acquisitions
since 2001 for more than a 50% ownership stake in targets valued
at more than $25 million that provide flavoring
ingredients; this set of transactions was used in relation to
Mafco Flavors:
Selected
Precedent TransactionsFlavor and Fragrances
|
|
|
|
|
Date
|
|
|
|
|
Announced
|
|
Target
|
|
Acquiror
|
|
1/9/11
|
|
Danisco A/S
|
|
DuPont Denmark Holding ApS
|
7/7/08
|
|
Wealthy King Investments Ltd.
|
|
Huabao International Holdings Limited
|
10/14/07
|
|
Gewürzmüller GmbH
|
|
Frutarom Industries Ltd.
|
6/5/07
|
|
Diana Ingredients S.A.
|
|
AXA Private Equity
|
5/3/07
|
|
Danisco A/SFlavor division
|
|
Firmenich SA
|
12/5/05
|
|
Continental Custom Ingredients
|
|
Tate & Lyle PLC
|
5/10/04
|
|
Manheimer Inc., Flavurence, Laboratorios Krauss and Fructamine
|
|
Kerry Group PLC
|
3/11/04
|
|
Rhodia SA
|
|
Danisco A/S
|
1/18/02
|
|
Nestle SA Food Ingredients Specialties S.A.
|
|
Givaudan AG
|
For each of the selected transactions, Evercore calculated and
compared TEV based on the implied transaction price as a
multiple of the targets LFQ EBITDA, as adjusted to exclude
one time and extraordinary charges. This analysis was based on
publicly available information at the time of announcement of
the relevant transaction. Evercore noted that the multiple of
TEV/LFQ Adjusted EBITDA for the Company based on the per share
merger consideration of $25.00 was 5.6x. The
45
range of multiples that Evercore calculated with respect to the
selected transactions is summarized below:
|
|
|
|
|
|
|
|
|
|
|
Printing
|
|
Financial
|
|
Education
|
|
Flavor and
|
|
|
Services
|
|
Solutions
|
|
Technology
|
|
Fragrances
|
|
TEV/LFQ EBITDA
|
|
|
|
|
|
|
|
|
High
|
|
12.2x
|
|
19.6x
|
|
27.5x
|
|
12.0x
|
Mean
|
|
8.0x
|
|
11.8x
|
|
15.6x
|
|
10.2x
|
Median
|
|
7.9x
|
|
11.2x
|
|
13.6x
|
|
10.8x
|
Low
|
|
4.3x
|
|
7.7x
|
|
7.8x
|
|
7.1x
|
Evercore then applied a range of selected multiples of 5.5x to
6.5x LFQ Adjusted EBITDA, which was derived from the analysis of
selected transactions described above as well as the relative
contributions to the Companys LFQ Adjusted EBITDA by each
of its operating divisions, to the corresponding financial data
of the Company. For example, based on HCHCs contribution
of approximately 68% to the Companys LFQ Adjusted EBITDA,
Evercore gave significantly more weight to the multiples derived
for the Printing Services transactions than to the multiples
derived for the Financial Solutions, Education Technology or
Flavor and Fragrances transactions. Evercore did not average or
calculate the mean or median multiples for each category of
selected transactions, nor did Evercore simply average or
calculate the mean or median multiples for the selected
transactions as a group. Moreover, Evercore derived this range
of selected multiples, which was lower than the mean or median
multiples in each of the four categories of selected
transactions, based on its professional judgment and experience,
including its understanding of the size, product diversity,
commodity exposure, relative profitability and expected growth
of the Companys operating divisions, rather than a purely
quantitative application of the multiples from the selected
transactions discussed above. This analysis indicated the
following implied per share equity reference range for the
Company, as compared to the merger consideration:
|
|
|
|
|
|
|
Implied Per Share Equity
|
|
|
LFQ Adjusted EBITDA
|
|
Reference Range for the
Company
|
|
Merger Consideration
|
$445 million
|
|
$22.40-$45.24
|
|
$25.00
|
Analysis
of Historical Premiums Paid
Evercore reviewed the premiums paid for (i) all-cash change
of control transactions for
U.S.-based
companies with enterprise values between $100 million and
$4.0 billion from January 2000 to July 2011, referred to
herein as the All-Cash Transactions, and
(ii) change of control cash transactions with
U.S. targets with a minimum transaction value of
$100 million from January 2000 to July 2011 where the
acquirer held a pre-transaction ownership stake of more than 0%
but less than 50%, referred to herein as the Minority-Led
Transactions. Evercore identified 735 All-Cash
Transactions and 57 Minority-Led Transactions with the foregoing
criteria.
Using information from Securities Data Corp., a data source that
monitors and publishes information on merger and acquisition
transactions, premiums paid were calculated as the percentage by
which the per share consideration paid in each such transaction
exceeded the closing market share prices of the target companies
one day, one week and four weeks prior to transaction
announcements. This analysis indicated the following implied
mean, median, 25% quartile, 75% quartile, high and low premiums
for the selected transactions:
46
|
|
|
|
|
|
|
|
|
1 Day Prior
|
|
1 Week Prior
|
|
4 Weeks Prior
|
|
All-Cash Transactions (735 transactions)
|
Mean
|
|
29%
|
|
32%
|
|
38%
|
Median
|
|
25%
|
|
27%
|
|
32%
|
25% Quartile
|
|
13%
|
|
16%
|
|
20%
|
75% Quartile
|
|
39%
|
|
42%
|
|
50%
|
High
|
|
149%
|
|
219%
|
|
391%
|
Low
|
|
(57)%
|
|
(59)%
|
|
(64)%
|
|
Minority-Led Transactions (57 transactions)
|
Mean
|
|
37%
|
|
37%
|
|
38%
|
Median
|
|
30%
|
|
30%
|
|
30%
|
25% Quartile
|
|
19%
|
|
17%
|
|
18%
|
75% Quartile
|
|
50%
|
|
55%
|
|
52%
|
High
|
|
120%
|
|
115%
|
|
144%
|
Low
|
|
(3)%
|
|
0%
|
|
(9)%
|
Based on the above analysis, Evercore then applied a range of
selected premiums derived from the selected transactions of
(i) 15% to 45% to the closing price of common stock on
June 10, 2011 (the date one day prior to the receipt of
Holdings initial proposal on June 13, 2011), and
(ii) 20% to 50% to the closing price of common stock on the
date 4 weeks prior to the receipt of Holdings initial
proposal on June 13, 2011. This analysis indicated the
following implied per share equity reference ranges for the
shares of common stock, as compared to the merger consideration:
Implied
Per Share Equity Reference Range for the
Company
|
|
|
|
|
|
|
20% to 50% Premium to
|
|
|
15% to 45% Premium to
|
|
Closing Price 4 Weeks
|
|
|
Closing Price on 6/10/11
|
|
Prior to Initial Proposal
|
|
Merger Consideration
|
$19.50 - $24.59
|
|
$27.19 - $33.99
|
|
$25.00
|
Discounted
Cash Flow Analysis
Evercore performed a discounted cash flow analysis of the
Company in order to derive implied per share equity reference
ranges for the common stock as of June 30, 2011, based on
the implied present value of the Companys future unlevered
cash flow. In this analysis, Evercore used the HCHC Projections,
the Mafco Flavors Projections and the Refinancing Assumptions.
Evercore calculated a range of terminal asset values of the
Company at the end of fiscal year 2015 by applying a range of
trailing terminal Adjusted EBITDA multiples of 5.0x to 5.5x to
the Companys 2015E Adjusted EBITDA. The unlevered free
cash flows and range of terminal asset values were then
discounted to present values using a range of discount rates of
9.5% to 11.5%, which was chosen by Evercore based upon an
analysis of the weighted average cost of capital of the Company
and the companies identified above under the caption
Analysis of Selected Publicly Traded Companies, as
well as the relative contributions to the Companys
estimated Adjusted EBITDA by
47
each of its operating divisions. The analysis indicated the
following implied per share equity reference range for the
Company, as compared to the merger consideration:
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Implied Per Share Equity
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Reference Range for the Company
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Merger Consideration
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$21.39-$38.22
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$25.00
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General
In connection with the review of the merger by the special
committee, Evercore performed a variety of financial and
comparative analyses for purposes of rendering its opinion. The
preparation of a fairness opinion is a complex process and is
not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary described above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Evercores opinion. In arriving at its fairness
determination, Evercore considered the results of all the
analyses and did not draw, in isolation, conclusions from or
with regard to any one analysis or factor considered by it for
purposes of its opinion. Rather, Evercore made its determination
as to fairness on the basis of its experience and professional
judgment after considering the results of all the analyses. In
addition, Evercore may have considered various assumptions more
or less probable than other assumptions, so that the range of
valuations resulting from any particular analysis described
above should therefore not be taken to be Evercores view
of the value of the Company. No company used in the above
analyses as a comparison is directly comparable to the Company,
and no transaction used is directly comparable to the merger.
Further, Evercores analyses involve complex considerations
and judgments concerning financial and operating characteristics
and other factors that could affect the acquisition, public
trading or other values of the companies or transactions used,
including judgments and assumptions with regard to industry
performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the
control of the Company or its advisors.
Evercore prepared these analyses for the purpose of providing an
opinion to the special committee as to the fairness, from a
financial point of view, of the merger consideration to be
received by holders of shares of common stock (other than
Holdings and its affiliates) pursuant to the merger. These
analyses do not purport to be appraisals or to necessarily
reflect the prices at which the business or securities actually
may be sold. Any estimates contained in these analyses are not
necessarily indicative of actual future results, which may be
significantly more or less favorable than those suggested by
such estimates. Accordingly, estimates used in, and the results
derived from, Evercores analyses are inherently subject to
substantial uncertainty, and Evercore assumes no responsibility
if future results are materially different from those forecasted
in such estimates. The merger consideration to be received by
the holders of shares of common stock pursuant to the Merger
Agreement was determined through negotiations between the
special committee and Holdings and was approved by the special
committee. Evercore did not recommend any specific consideration
to the special committee or that any given merger consideration
constituted the only appropriate merger consideration.
Under the terms of Evercores engagement, the special
committee agreed, on behalf of the Company, to pay Evercore
(i) an initial fee of $125,000, which was payable upon
execution of Evercores engagement letter, (ii) a
retainer fee of $125,000 per month which was payable in July,
August and September 2011, (iii) a fee of $2,000,000 which
was payable upon the delivery of Evercores opinion and
(iv) an additional discretionary fee in an amount not to
exceed $1,000,000 for extraordinary performance, as determined
by the special committee in its sole and absolute
48
discretion. The special committee has informed Evercore that,
while it is favorably disposed to paying some additional
discretionary fee, to date, it has not decided what amount, if
any, of this fee to pay to Evercore. In addition, the Company
has agreed to reimburse Evercore for its reasonable expenses
(including legal fees, expenses and disbursements), and to
indemnify Evercore for certain liabilities arising out of its
engagement. During the two year period prior to the date of its
opinion, no material relationship existed between Evercore and
its affiliates and the Company, Parent or Holdings. Evercore may
provide financial or other services to the Company or Holdings
in the future and in connection with any such services Evercore
may receive compensation.
In the ordinary course of business, Evercore or its affiliates
may actively trade the securities, or related derivative
securities, or financial instruments of the Company and its
affiliates, for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short
position in such securities or instruments.
The Company engaged Evercore to act as a financial advisor based
on its qualifications, experience and reputation. Evercore is an
internationally recognized investment banking firm and is
regularly engaged in the valuation of businesses in connection
with mergers and acquisitions, leveraged buyouts, competitive
biddings, private placements and valuations for corporate and
other purposes.
Holdings
Filing Persons Purposes and Reasons for the
Merger
Under the SEC rules governing going private
transactions, the Holdings Filing Persons may be deemed to be
engaged in a going private transaction and therefore
are required to express their purposes and reasons for the
merger to the Companys unaffiliated stockholders. The
Holdings Filing Persons are making the statements included in
this section solely for the purpose of complying with the
requirements of
Rule 13e-3
and related rules under the Exchange Act.
For the Holdings Filing Persons, a primary purpose for the
merger is to permit the Holdings Investors and Parent to acquire
all shares of common stock not owned by them so that the Company
can be operated as a privately held company. The Holdings Filing
Persons believe that as a private company the Company will have
greater operating flexibility, and management will be able to
more effectively concentrate on long-term growth and reduce its
focus on the
quarter-to-quarter
performance often emphasized by the public markets. Moreover,
the Company will not be subject to certain obligations and
constraints, and related costs, associated with having publicly
traded equity securities.
An additional purpose of the merger is to enable stockholders
other than the Holdings Investors to immediately realize the
value of their investment in M & F Worldwide through
their receipt of the per share merger consideration of $25.00 in
cash, representing a premium of approximately 47% to the $16.96
closing price of the common stock on NYSE on June 10, 2011,
the last trading day before public disclosure of Holdings
initial proposal to acquire the Company for $24.00 per share,
and a premium of approximately 22.7% to the $20.37 closing price
of the common stock on NYSE on September 9, 2011, the last
trading day prior to the announcement of the Merger Agreement.
The Holdings Filing Persons believe that structuring the
transaction as a merger is preferable to other transaction
structures because it will enable the Holdings Investors and
Parent to acquire all of the outstanding shares of the Company
held by stockholders other than the Holdings Investors for cash.
49
Holdings
Filing Persons Position as to Fairness of the
Merger
Under the SEC rules governing going private
transactions, the Holdings Filing Persons may be deemed to be
engaged in a going private transaction and therefore
are required to express their beliefs as to the fairness of the
merger to the Companys unaffiliated stockholders. The
Holdings Filing Persons are making the statements included in
this section solely for the purposes of complying with the
requirements of
Rule 13e-3
and related rules under the Exchange Act. The Holdings Filing
Persons views as to fairness of the merger should not be
construed as a recommendation to any stockholder as to how such
stockholder should vote on the proposal to approve the Merger
Agreement.
The Holdings Filing Persons did not participate in the
deliberations of the special committee regarding, or receive
advice from the Companys or the special committees
legal or financial advisors as to, the substantive and
procedural fairness of the merger, nor did the Holdings Filing
Persons undertake any independent evaluation of the fairness of
the merger or engage a financial advisor for such purposes.
Holdings engaged Moelis as financial advisors to provide certain
financial advisory services with respect to the proposal made by
Holdings on June 13, 2011. Moelis did not provide an
opinion with respect to the fairness of the merger or the merger
consideration. The Holdings Filing Persons believe, however,
that the merger is fair to the Companys unaffiliated
stockholders based on the following factors:
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the merger consideration of $25.00 per share represents a
premium of approximately 47% to the $16.96 closing price of
common stock on NYSE on June 10, 2011, the last trading day
before Holdings made an initial proposal to acquire the Company
for $24.00 per share, and a premium of approximately 22.7% to
the $20.37 closing price of the common stock on NYSE on
September 9, 2011, the last trading day prior to the
announcement of the Merger Agreement;
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the belief that the value to unaffiliated stockholders of the
Company continuing as an independent public company would not be
as great as the merger consideration, due to the public
markets emphasis on short term results, and the potential
risks and uncertainties associated with the near-term prospects
of the Company in light of the ongoing decline and continuing
challenges facing certain of its businesses;
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the merger will provide consideration to the Companys
stockholders entirely in cash, thus eliminating any uncertainty
in valuing the merger consideration;
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the presentations made by Moelis in connection with the proposed
transaction with the Company, as described elsewhere;
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there are not any non-customary requirements or conditions to
the merger and the merger is not conditioned on any financing
being obtained by Parent, thus increasing the likelihood that
the merger will be consummated and the consideration to be paid
to the Companys stockholders will be paid;
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the Merger Agreement allows the board of directors or the
special committee to withdraw or change its recommendation of
the Merger Agreement, and to terminate the Merger Agreement in
certain circumstances, subject, in certain cases, to a payment
by the Company to Parent of a termination fee;
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the board of directors established a special committee of
independent directors, consisting solely of directors who are
not officers, employees or controlling stockholders of the
Company and are not affiliated with Holdings, to evaluate
Holdings proposal and negotiate with Holdings;
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50
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the special committee was deliberative in its process, taking
three months to analyze, evaluate and negotiate the terms of the
merger;
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neither Holdings nor its affiliates, participated in or had any
influence on the deliberative process of, or the conclusions
reached by, the special committee or the negotiating positions
of the special committee;
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the board of directors and special committee retained
independent, nationally recognized financial and legal advisors,
each of which has extensive experience in transactions similar
to the merger;
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the $25.00 per share merger consideration and other terms and
conditions of the Merger Agreement resulted from extensive
negotiations between the special committee and its advisors and
Holdings and its advisors;
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the special committee unanimously determined that the Merger
Agreement and the merger are advisable, fair to, and in the best
interests of the Companys stockholders (other than
Holdings and its affiliates);
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the board of directors (without the participation of the
abstaining directors) unanimously (i) approved and adopted
the Merger Agreement, (ii) determined that the merger is
advisable, fair to and in the best interest of the
Companys unaffiliated stockholders and (iii) resolved
to recommend that the stockholders of the Company approve the
Merger Agreement;
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the special committee received an opinion from its financial
advisor to the effect that, as of the date of the opinion and
based upon and subject to the assumptions made, matters
considered and limitations on the scope of review undertaken by
such financial advisor as set forth in its written opinion, the
per share merger consideration of $25.00 was fair, from a
financial point of view, to the holders of shares of common
stock (other than Holdings and its affiliates), as more fully
described in the section titled
Special
FactorsOpinion of Evercore Group L.L.C.
;
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the merger is conditioned upon a majority of the Companys
outstanding common stock voting in favor of the approval of the
Merger Agreement, and upon the holders of majority of the
outstanding shares of common stock other Holdings and its
affiliates voting in favor of the approval of the Merger
Agreement; and
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stockholders who do not vote in favor of the Merger Agreement
and who comply with certain procedural requirements will be
entitled, upon completion of the merger, to exercise statutory
appraisal rights under Delaware law.
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The Holdings Filing Persons did not consider the liquidation
value of the Company because they considered the Company to be a
viable, going concern and therefore did not consider liquidation
value to be a relevant valuation method. Further, the Holdings
Filing Persons did not consider net book value because it does
not reflect the following: (a) risks associated with the
Companys highly leveraged capital structure, including the
significant risks relating to the Companys ability to
refinance its existing debt before maturity with satisfactory
terms, (b) a conglomerate discount on the value per share
that typically exists in public markets, (c) market risks
inherent in remaining a public company and (d) the small
public float and limited trading volume of the Companys
shares that results in undesirable price volatility and
restricts opportunities for stockholders to achieve liquidity.
The Companys net book value per share as of
September 30, 2011 was $37.89 (calculated based on
19,333,931 shares outstanding as of such date).
51
The foregoing discussion of the information and factors
considered and given weight by the Holdings Filing Persons in
connection with the fairness of the merger is not intended to be
exhaustive but includes all material factors considered by the
Holdings Filing Persons. The Holdings Filing Persons did not
find it practicable to, and did not, quantify or otherwise
assign relative weights to the individual factors considered in
reaching their conclusions as to the fairness of the merger.
Rather, the fairness determinations were made after
consideration of all of the foregoing factors as a whole.
June 9,
2011 Presentation by Financial Advisor to Holdings
On June 9, 2011, Moelis made a presentation to the
management of Holdings regarding a possible transaction with the
Company, which we refer to as the June 9, 2011
presentation. In the presentation, Moelis provided a
business segment overview, reviewed recent share price
performance and trading multiples and provided a preliminary
valuation summary summarized below. At the time of the
presentation, the Companys stock price was $17.90 per
share.
Holdings did not request, and Moelis did not provide,
(i) any opinion to Holdings or any other person in
connection with the merger as to the fairness of the merger
consideration to Holdings, the Company, the stockholders of the
Company or any other person or (ii) any other valuation of
the Company for the purpose of assessing the fairness of the
merger consideration to Holdings, the Company, the stockholders
of the Company or any other person. Because Moelis was not
requested to render a fairness opinion, it was not necessary to,
and it did not, submit the information and analyses described
below to a fairness committee for review, nor did they follow
all of the procedures that they ordinarily follow in connection
with rendering a fairness opinion. Moelis has established
procedures for rendering a fairness opinion, including review of
the fairness opinion and the underlying information and analyses
by a fairness committee composed of senior investment bankers
with relevant expertise. Had Moelis been requested to provide a
fairness opinion or valuation of the Company and submitted the
information and analyses described below to their full fairness
opinion process, including review by a fairness committee, the
information and analyses presented by Moelis following that
process may have been different from those described below.
The following summary of the June 9, 2011 presentation is
included here to comply with disclosure requirements of the SEC.
The analyses described herein and the order in which they are
presented and the results of the analyses do not represent
relative importance or weight given to these analyses by Moelis
or Holdings. The summary of the June 9, 2011 presentation
set forth below is qualified in its entirety by reference to the
full text of the June 9, 2011 presentation, which is filed
as Exhibit (c)(7) to the Companys
Schedule 13E-3
dated as of the date hereof and incorporated herein by reference
to this document.
Neither the presentation materials nor this
summary constitutes a recommendation as to whether any
stockholder of the Company should vote in favor of the merger or
any other action that any stockholder of the Company should take
or refrain from taking in connection with the merger.
In connection with preparing the financial analysis, Moelis:
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reviewed certain publicly available business and financial
information relating to the Company that Moelis deemed relevant;
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reviewed certain internal information relating to the business,
including financial forecasts, earnings, cash flow, assets,
liabilities and prospects of the Company furnished to Moelis by
the Company;
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52
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conducted discussions with members of senior management and
representatives of Holdings concerning the matters described in
the foregoing, as well as the business and prospects of the
Company generally;
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reviewed publicly available financial and stock market data for
the Company and compared them with those of certain other
companies that Moelis deemed relevant; and
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conducted such other financial studies and analyses and took
into account such other information as Moelis deemed appropriate.
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In connection with its review, Moelis did not assume any
responsibility for independent verification of any of the
information supplied to, discussed with, or reviewed by Moelis
for the purpose of its June 9, 2011 presentation and has,
with the consent of Holdings, relied on such information being
complete and accurate in all material respects. In addition, at
the direction of Holdings, Moelis did not make any independent
evaluation or appraisal of any of the assets or liabilities
(contingent, derivative, off-balance-sheet, or otherwise) of the
Company, nor was Moelis furnished with any such evaluation or
appraisal. With respect to the forecasted financial information
referred to above, Moelis assumed, at the direction of Holdings,
that such financial information was reasonably prepared on a
basis reflecting the best currently available estimates and
judgments of the management of the Company as to the future
performance of the Company.
Moelis June 9, 2011 presentation was necessarily
based on economic, monetary, market and other conditions as in
effect on, and information made available to Moelis as of, the
date of such presentation. Accordingly, although subsequent
developments may affect the information contained in the
June 9, 2011 presentation, Moelis did not assume any
obligation to update, revise or reaffirm the contents of the
June 9, 2011 presentation.
The following is a summary of the material financial analyses
contained in the June 9, 2011 presentation prepared by
Moelis. The financial analyses summarized below include
information presented in tabular format. In order to fully
understand the financial analyses performed by Moelis, the
tables must be read together with the text of each summary. The
tables alone do not constitute a complete description of the
financial analyses performed by Moelis. Considering the data set
forth in the tables below without considering the full narrative
description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of the financial analyses
performed by Moelis.
Premiums Paid Analysis.
For purposes of the
June 9, 2011 presentation, Moelis reviewed publicly
available information for the premiums paid since June 2006 in
public transactions between $500 million and
$1 billion in equity value for the
1-day,
1-week and
1-month
period prior to the announcement of the transaction and then
compared the Companys trading price to such premiums as if
a transaction had been announced on the date of the
presentation. This analysis showed the following:
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1-Day
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1-Week
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1-Month
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Median Offer Price Premium
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20.2%
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23.0%
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27.4%
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MFW Average Trading Price
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$
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17.90
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$
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18.70
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$
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21.05
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Implied MFW Offer Price
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$
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21.51
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$
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23.00
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$
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26.81
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Illustrative Leveraged Buyout Analysis.
Moelis
performed an analysis of the equity return that an acquiror
would theoretically receive if the Company were acquired in a
leveraged buyout transaction. For purposes of this analysis,
Moelis used projections provided by the Companys
53
management through fiscal 2015 and assumed, among other things,
a range of exit multiples of 4.25x to 4.75x the Companys
2015 estimated EBITDA, target equity returns ranging from 22.5%
to 27.5%, an equity contribution of 30% and a transaction date
of December 31, 2011. See
Special
FactorsProjected Financial Information
. Based on
these assumptions, Moelis derived an illustrative estimate of
the maximum consideration that could be paid in an acquisition
of the Company by a financial buyer ranging from $9.72 per share
to $28.25 per share.
Discounted Cash Flow Analysis (Consolidated
Company).
Moelis conducted a discounted cash flow, or
DCF, analysis of the Company on a consolidated basis to
calculate the estimated present value of the future cash flows
of the Company. A DCF analysis is a method of evaluating a
business using estimates of the future unlevered free cash flows
generated by the business and taking into consideration the time
value of money with respect to those future cash flows by
calculating their present value. Present
value refers to the current value of one or more future
cash payments for the business, which Moelis refers to as that
business free cash flows, and is obtained by discounting
those free cash flows back to the present using a discount rate
that takes into account macro-economic assumptions and estimates
of risk, the opportunity costs of capital, capitalized returns
and other appropriate factors. Terminal value refers
to the value of all free cash flows from an asset for periods
beyond the final forecast period.
Using projections provided by the Companys management,
Moelis performed a DCF analysis of the Company on a consolidated
basis (excluding contributions from GlobalScholar and Spectrum
K12) utilizing the after-tax unlevered free cash flows for the
second half of 2011 through 2015. See
Special
FactorsProjected Financial Information
. Moelis
used discount rates ranging from 12.0% to 13.0%, which was based
upon a number of factors, including the weighted average cost of
capital of the Company. The terminal value was then calculated
using the perpetuity growth method assuming growth rates of
(2.0%) to 0%. Moelis also valued the GlobalScholar and Spectrum
K12 businesses at their acquisition cost due to their recent
acquisition by the Company. Based on the foregoing, Moelis
calculated an implied reference range for the Companys
common stock of $10.35 to $28.82 per share.
Discounted Cash Flow Analysis
(Sum-of-the-Parts).
Using
projections provided by the Companys management, Moelis
performed a DCF analysis of the Company on a
sum-of-the-parts
basis utilizing the after-tax unlevered free cash flows for the
second half of 2011 through 2015 for each of the Companys
business segments. Moelis used the discount rates in the table
below depending on the segment, which were based upon a number
of factors, including the weighted average cost of capital of
comparable companies in each business segment. The terminal
value was then calculated using the perpetuity growth method
assuming growth rates in the table below depending on the
segment.
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Discount Rates
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Perpetuity Growth Rates
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Segment
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Min
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Max
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Min
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Max
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Harland Clarke
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11.5%
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12.5%
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(2.0%)
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0%
|
Harland Financial Solutions
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12.5%
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13.5%
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2.0%
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4.0%
|
Scantron-Legacy Business
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11.5%
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12.5%
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(11.0%)
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(9.0%)
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Scantron-Performance and Achievement
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16.5%
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17.5%
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3.0%
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5.0%
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Mafco Worldwide
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11.0%
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12.0%
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(1.0%)
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1.0%
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Based on the foregoing, and adjusting the ranges of implied
enterprise values for net debt, valuing GlobalScholar and
Spectrum K12 at acquisition cost and applying a
conglomerate discount
54
of 15%, Moelis calculated an implied reference range for the
Companys common stock on a
sum-of-the-parts
analysis of $13.77 to $31.87 per share.
Sum-of-the-Parts
Analysis: Selected Publicly Traded Companies.
In light
of the segmented nature of the Companys business, Moelis
also conducted a
sum-of-the-parts
analysis. Based on its professional judgment, Moelis selected
publicly traded companies that shared similar characteristics,
including operations and size, with each of the business
segments of the Company and for which relevant financial
information was publicly available. The list of selected
companies and their segments is set forth below:
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Direct Marketing and Print
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Financial Services B2B
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R.R. Donnelley & Sons Company
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Fidelity National Information Services, Inc.
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Quad/Graphics, Inc.
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Fiserv, Inc.
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Valassis Communications Inc.
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Equifax Inc.
|
Deluxe Corp.
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Dun & Bradstreet Corp.
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Cenveo Inc.
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Jack Henry & Associates Inc.
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ACCO Brands Corporation
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Convergys Corporation
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Consolidated Graphics, Inc.
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Acxiom Corporation
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Harte-Hanks
Inc.
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The Standard Register Company
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Education Services
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Tobacco Supplier
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The Washington Post Company
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Celanese Corp.
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Scholastic Corporation
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Eastman Chemical Co.
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EPIQ Systems, Inc.
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Alliance One International, Inc.
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Renaissance Learning Inc.
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Moelis applied the estimated 2011 EBITDA for each segment of the
Companys business (other than Scantron-Performance and
Achievement) to the following low and high implied multiples
selected from a review of the corresponding multiples for
certain selected publicly traded companies.
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Multiple of Estimated 2011 EBITDA
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Segment
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Low Multiple
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High Multiple
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Harland Clarke
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4.0x
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4.5x
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Harland Financial Solutions
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7.0x
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8.0x
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Scantron-Legacy Business
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4.0x
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4.5x
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Mafco Worldwide
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5.0x
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6.0x
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For Scantron-Performance and Achievement, Moelis used low and
high revenue multiples of 2.0x and 3.0x estimated 2011 revenues,
respectively.
Moelis then adjusted the resulting range of implied enterprise
values for net debt, the value of GlobalScholar and Spectrum K12
at their acquisition costs and the application of a
conglomerate discount of 15%. This analysis led
Moelis to an implied reference range for shares of the
Companys common stock of $16.28 per share to $30.65 per
share.
55
General
The preparation of financial analyses is a complex analytical
process involving various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances
and, therefore, is not readily susceptible to partial analysis
or summary description. Moelis believes that the analyses
summarized above must be considered as a whole. Moelis further
believes that selecting portions of the analyses and the factors
considered or focusing on information presented in tabular
format, without considering all analyses and factors or the
narrative description of the analyses, could create a misleading
or incomplete view of the processes underlying Moelis
analyses. The fact that any specific analysis has been referred
to in the summary above is not meant to indicate that such
analysis was viewed as any more significant or was or should be
given any greater weight than any other analysis.
No company used in the analyses described above for purposes of
comparison is directly comparable to the Company. In addition,
such analyses do not purport to be appraisals, nor do they
necessarily reflect the prices at which businesses or securities
actually may be sold. The estimates of the future performance of
the Company provided by the Companys management in or
underlying Moelis analyses are not necessarily indicative
of actual values or actual future results, which may be
significantly more or less favorable than those suggested by
Moelis analyses. Because the estimates of the future
performance of the Company provided by the Companys
management described above are inherently subject to
uncertainty, being based upon numerous factors or events beyond
the control of the parties or their respective advisors, neither
Holdings, nor Moelis or any other person assumes responsibility
if future results are materially different from those forecast.
The type and amount of consideration payable in the merger were
determined through negotiations between the Company and Holdings
and were approved by the board of directors of the Company and
Holdings board of directors and not by any financial
advisor. The decision to enter into the Merger Agreement was
solely that of the special committee and board of directors of
the Company and Holdings. As described above, Moelis
analyses were only one of many factors considered by Holdings in
its evaluation of the proposed merger and should not be viewed
as determinative of the view of Holdings.
Moelis June 9, 2011 presentation was prepared for the
use and benefit of Holdings in its evaluation of the Company.
Holdings has agreed to pay Moelis a fee of $3.0 million
promptly upon the consummation of the merger. In addition,
Holdings has agreed to indemnify Moelis for certain liabilities
arising out of its engagement. Moelis or its respective
affiliates in the past have provided, currently are providing
and in the future may provide financial advisory and financing
services to the Company, Holdings and certain of their
respective affiliates, and have received and in the future may
receive fees for the rendering of these services. Since January
2008 ,Moelis has received aggregate fees from Holdings and its
affiliates, including the Company, for corporate and investment
banking services unrelated to the merger of approximately
$3.96 million. In the ordinary course of business, Moelis,
its successors and affiliates may trade securities of the
Company and the Companys affiliates for their own accounts
or for the accounts of their customers and, accordingly, may at
any time hold long or short positions in such securities.
Holdings engaged Moelis to act as its financial advisor based on
Moelis qualifications, reputation and substantial
experience in similar transactions. Moelis is regularly engaged
in the valuation of businesses and their securities in
connection with mergers and acquisitions, strategic
transactions, corporate restructurings, and valuations for
corporate and other purposes.
56
Plans for
M & F Worldwide after the Merger
It is expected that the Companys operations will be
conducted after the merger substantially as they currently are
being conducted. The Holdings Filing Persons have advised the
Company that they do not have any current intentions, plans or
proposals to cause the Company to engage in any of the following:
|
|
|
|
|
an extraordinary corporate transaction following consummation of
the merger such as a merger, reorganization or liquidation,
|
|
|
|
the relocation of any material operations or sale or transfer of
a material amount of assets, or
|
|
|
|
any other material changes in its business.
|
Nevertheless, following consummation of the merger, the
management
and/or
board
of directors of the surviving corporation may initiate a review
of the surviving corporation and its assets, corporate and
capital structure, capitalization, operations, business,
properties and personnel to determine what changes, if any,
would be desirable following the merger to enhance the business
and operations of the surviving corporation and may cause the
surviving corporation to engage in the types of transactions set
forth above if the management
and/or
board
of directors of the surviving corporation decides that such
transactions are in the best interest of the surviving
corporation upon such review. While no plans or proposals have
been developed, the surviving corporation may make efforts to
attract and retain experienced management, improve customer
relations, review the Companys facilities, realign its
compensation structure, pursue divestitures of non-core assets,
and refinance its and its subsidiaries indebtedness. The
surviving corporation expressly reserves the right to make any
changes it deems appropriate in light of its evaluation and
review of the surviving corporation or in light of future
developments.
Projected
Financial Information
M & F Worldwide does not as a matter of course make
public projections as to future performance or earnings.
However, financial forecasts prepared by senior management were
made available to the Holdings Filing Persons as well as to the
special committee and their respective financial advisors in
connection with their consideration of the merger. We have
included a subset of these projections to give our stockholders
access to certain nonpublic information considered by the
Holdings Filing Persons, the special committee and their
respective financial advisors for purposes of considering and
evaluating the merger. The inclusion of this information should
not be regarded as an indication that the Holdings Filing
Persons, the special committee, their respective financial
advisors, or any other recipient of this information considered,
or now considers, this information to be a reliable prediction
of future results.
M & F Worldwide advised the recipients of the
projections that its internal financial forecasts, upon which
the projections were based, are subjective in many respects. The
projections reflect numerous assumptions and estimates with
respect to industry performance, general business, economic,
political, market and financial conditions, competitive
uncertainties, and other matters, all of which are difficult to
predict and beyond M & F Worldwides control. As
a result, there can be no assurance that the projected results
will be realized or that actual results will not be
significantly higher or lower than projected. The projections
are forward-looking statements and should be read with caution.
See
Cautionary Statement Concerning Forward-Looking
Information
.
The financial projections were prepared for either internal use
or to assist the Holdings Filing Persons, the special committee
and their respective financial advisors with their due diligence
57
investigations of M & F Worldwide and not with a view
toward public disclosure or toward complying with GAAP, the
published guidelines of the SEC regarding projections or the
guidelines established by the American Institute of Certified
Public Accountants for preparation and presentation of
prospective financial information. M & F
Worldwides independent registered public accounting firm
has not examined or compiled any of the financial projections,
expressed any conclusion or provided any form of assurance with
respect to the financial projections and, accordingly, assumes
no responsibility for them. The financial projections do not
take into account any circumstances or events occurring after
the date they were prepared.
Readers of this proxy statement are cautioned not to place undue
reliance on the specific portions of the financial projections
set forth below. No one has made or makes any representation to
any stockholder regarding the information included in these
projections.
For the foregoing reasons, as well as the bases and assumptions
on which the financial projections were compiled, the inclusion
of specific portions of the financial projections in this proxy
statement should not be regarded as an indication that such
projections are an accurate prediction of future events, and
they should not be relied on as such.
Except as may be
required by applicable securities laws, M & F
Worldwide does not intend to update, or otherwise revise the
financial projections or the specific portions presented to
reflect circumstances existing after the date when made or to
reflect the occurrence of future events, even in the event that
any or all of the assumptions are shown to be in error.
Projections
Provided to Evercore and the Special Committee
In June 2011, the Company provided Evercore with consolidated
projected financial data for the Company, together with separate
projected financial data for its subsidiaries HCHC and Mafco
Flavors. The Company initially prepared these projections in
April 2011 in connection with a contemplated amendment and
extension of HCHCs senior secured term loan facility and a
contemplated refinancing transaction with respect to certain
indebtedness of Mafco Flavors, which ultimately were not
consummated. The projections for HCHC reflected
(i) declines in HCHCs check volumes with slight
improvement in future years versus historical performance and
slightly increasing revenues per unit over the forecast period,
(ii) improved organic growth in HCHCs financial
solutions segment versus prior periods, (iii) significant
revenue growth in HCHCs web-based educational services and
(iv) revenue declines in HCHCs other non-web based
education businesses. The projections for Mafco Flavors
reflected (i) continued sales unit declines to the
worldwide tobacco industry as the result of the continued
worldwide decline in the use of consumer tobacco products
containing licorice extract, (ii) continued organic growth
in
Magnasweet
®
and pure licorice derivatives, (iii) sales growth in pure
licorice derivatives resulting from a business to be acquired,
(iv) the anticipated benefits to be realized from
manufacturing technology improvements and (v) investments
to be made in raw materials and facilities to support the
planned business
58
developments. These initial projections, referred to herein as
the Initial Financing Case Projections, are
summarized below:
Summary
of Initial Financing Case
Projections
(1)
(in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
$
|
1,656
|
|
|
$
|
1,696
|
|
|
$
|
1,713
|
|
|
$
|
1,704
|
|
|
$
|
1,708
|
|
Mafco Flavors
|
|
|
117
|
|
|
|
127
|
|
|
|
132
|
|
|
|
137
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,773
|
|
|
|
1,823
|
|
|
|
1,845
|
|
|
|
1,841
|
|
|
|
1,847
|
|
Adjusted
EBITDA
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
|
411
|
|
|
|
452
|
|
|
|
482
|
|
|
|
485
|
|
|
|
495
|
|
Mafco Flavors
|
|
|
30
|
|
|
|
32
|
|
|
|
35
|
|
|
|
39
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441
|
|
|
|
484
|
|
|
|
518
|
|
|
|
524
|
|
|
|
535
|
|
Adjusted
EBIT
(2)
|
|
|
271
|
|
|
|
316
|
|
|
|
354
|
|
|
|
364
|
|
|
|
382
|
|
Adjusted
EPS
(2)
|
|
|
5.04
|
|
|
|
6.38
|
|
|
|
6.33
|
|
|
|
6.36
|
|
|
|
7.09
|
|
Unlevered
FCF
(3)
|
|
|
83
|
|
|
|
231
|
|
|
|
269
|
|
|
|
296
|
|
|
|
316
|
|
Capex
|
|
|
55
|
|
|
|
48
|
|
|
|
43
|
|
|
|
38
|
|
|
|
37
|
|
Total debt
|
|
|
2,204
|
|
|
|
2,036
|
|
|
|
1,858
|
|
|
|
1,663
|
|
|
|
1,465
|
|
Total cash on hand
|
|
|
297
|
|
|
|
292
|
|
|
|
286
|
|
|
|
285
|
|
|
|
303
|
|
(1) Consolidated figures from
the Initial Financing Case Projections are set forth in
Evercores presentations to the special committee dated
August 10, 2011 and July 27, 2011. Evercores
presentation the special committee dated July 27, 2011 also
included the additional HCHC and Mafco Flavors revenue and
adjusted EBITDA data and total cash data set forth above. The
adjusted EPS, unlevered FCF, Capex and total debt data set forth
above and in Evercores presentation to the special
committee dated August 10, 2011 differ from that initially
provided by the Company and reflected in Evercores
presentation to the special committee dated July 27, 2011
due to certain minor adjustments subsequently made by the
Company.
(2) Adjusted to exclude the
settlement of contingent claims.
(3) Unlevered FCF is defined
as net income plus the sum of after-tax net interest expense,
after-tax settlement of contingent claims, and depreciation and
amortization less the sum of Capex, cash acquisitions, changes
in net working capital and other cash outlays.
In July 2011, following further discussions with Evercore, HCHC
management determined that certain assumptions reflected in the
HCHC projections that were included in the Initial Financing
Case Projections did not reflect managements then-current
views and accordingly provided Evercore with updated financial
projections. The updated financial projections reflected changes
due to (i) greater expected declines in HCHCs check
volumes, partially offset by improved cost trends,
(ii) higher revenue growth from new initiatives, partially
offset by reduced revenues per unit expectations,
(iii) lower projected revenues and profitability in
HCHCs financial solutions segment due to expectations of
continued bank closures and further industry consolidation in
addition to reduced organic growth rates, (iv) a delay in
the revenue growth of its web-based educational services
business units and (v) modest reductions in the assumed
growth rate of HCHCs other education businesses. No
changes were made to the Mafco Flavors projections included in
the Initial Financing Case Projections, which were confirmed by
Mafco Flavors management. These updated projections, referred to
herein as the Updated Case Projections, are
summarized below:
59
Summary
of Updated Case
Projections
(1)
(in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
$
|
1,647
|
|
|
$
|
1,663
|
|
|
$
|
1,672
|
|
|
$
|
1,648
|
|
|
$
|
1,639
|
|
Mafco Flavors
|
|
|
117
|
|
|
|
127
|
|
|
|
132
|
|
|
|
137
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,764
|
|
|
|
1,790
|
|
|
|
1,804
|
|
|
|
1,786
|
|
|
|
1,778
|
|
Adjusted
EBITDA
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
|
411
|
|
|
|
427
|
|
|
|
454
|
|
|
|
443
|
|
|
|
451
|
|
Mafco Flavors
|
|
|
30
|
|
|
|
32
|
|
|
|
35
|
|
|
|
39
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441
|
|
|
|
459
|
|
|
|
489
|
|
|
|
482
|
|
|
|
491
|
|
Adjusted
EBIT
(2)
|
|
|
271
|
|
|
|
291
|
|
|
|
325
|
|
|
|
322
|
|
|
|
338
|
|
Adjusted
EPS
(2)
|
|
|
5.04
|
|
|
|
5.59
|
|
|
|
5.45
|
|
|
|
5.03
|
|
|
|
5.61
|
|
Unlevered
FCF
(3)
|
|
|
87
|
|
|
|
237
|
|
|
|
251
|
|
|
|
270
|
|
|
|
289
|
|
Capex
|
|
|
55
|
|
|
|
48
|
|
|
|
43
|
|
|
|
38
|
|
|
|
37
|
|
Total debt
|
|
|
2,201
|
|
|
|
2,027
|
|
|
|
1,866
|
|
|
|
1,697
|
|
|
|
1,527
|
|
Total cash on hand
|
|
|
297
|
|
|
|
292
|
|
|
|
286
|
|
|
|
285
|
|
|
|
303
|
|
(1) Consolidated figures from
the Updated Case Projections are set forth in Evercores
presentations to the special committee dated August 10,
2011 and July 27, 2011. Evercores presentation to the
special committee dated July 27, 2011 also included the
additional HCHC and Mafco Flavors revenue and adjusted EBITDA,
Capex and total cash data set forth above. The adjusted EPS,
unlevered FCF and total debt data set forth above and in
Evercores presentation to the special committee dated
August 10, 2011 differ from that initially provided by the
Company and reflected in Evercores presentation to the
special committee dated July 27, 2011 due to certain minor
adjustments subsequently made by the Company.
(2) Adjusted to exclude the
settlement of contingent claims.
(3) Unlevered FCF is defined
as net income plus the sum of after-tax net interest expense,
after-tax settlement of contingent claims, and depreciation and
amortization less the sum of Capex, cash acquisitions, changes
in net working capital and other cash outlays.
In August 2011, following further discussions with Evercore,
Company management determined that, while the Updated Case
Projections reflected managements then current operating
expectations, neither the Initial Financing Case Projections nor
the Updated Case Projections reflected managements most
current views concerning the refinancing of the Companys
indebtedness and accordingly provided Evercore with updated
refinancing assumptions. These updated refinancing assumptions
reflected Company managements assumption that the
refinancing would have an earlier closing date, with a different
mix of debt and at higher interest rates than contemplated in
May 2011. The Updated Case Projections were then revised to
take into account the new refinancing assumptions (as so
revised, the Final Case Projections), which are
summarized below:
60
Summary
of Final Case
Projections
(1)
(in
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
$
|
1,647
|
|
|
$
|
1,663
|
|
|
$
|
1,672
|
|
|
$
|
1,648
|
|
|
$
|
1,639
|
|
Mafco Flavors
|
|
|
117
|
|
|
|
127
|
|
|
|
132
|
|
|
|
137
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,764
|
|
|
|
1,790
|
|
|
|
1,804
|
|
|
|
1,786
|
|
|
|
1,778
|
|
Adjusted
EBITDA
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
|
411
|
|
|
|
427
|
|
|
|
454
|
|
|
|
443
|
|
|
|
451
|
|
Mafco Flavors
|
|
|
30
|
|
|
|
32
|
|
|
|
35
|
|
|
|
39
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441
|
|
|
|
459
|
|
|
|
489
|
|
|
|
482
|
|
|
|
491
|
|
Adjusted
EBIT
(2)
|
|
|
271
|
|
|
|
291
|
|
|
|
325
|
|
|
|
322
|
|
|
|
338
|
|
Adjusted
EPS
(2)
|
|
|
5.03
|
|
|
|
3.70
|
|
|
|
3.50
|
|
|
|
3.82
|
|
|
|
4.57
|
|
Unlevered
FCF
(3)
|
|
|
87
|
|
|
|
226
|
|
|
|
260
|
|
|
|
270
|
|
|
|
289
|
|
Capex
|
|
|
55
|
|
|
|
48
|
|
|
|
43
|
|
|
|
38
|
|
|
|
37
|
|
Total debt
|
|
|
2,201
|
|
|
|
2,044
|
|
|
|
1,902
|
|
|
|
1,746
|
|
|
|
1,586
|
|
Total cash on hand
|
|
|
297
|
|
|
|
230
|
|
|
|
225
|
|
|
|
223
|
|
|
|
242
|
|
(1) Consolidated figures from
the Final Case Projections are set forth in Evercores
presentation to the special committee dated September 10,
2011; but that presentation did not include the additional HCHC
and Mafco Flavors revenue and adjusted EBITDA data set forth
above.
(2) Adjusted to exclude the
settlement of contingent claims.
(3) Unlevered FCF is defined
as net income plus the sum of after-tax net interest expense,
after-tax settlement of contingent claims, and depreciation and
amortization less the sum of Capex, cash acquisitions, changes
in net working capital and other cash outlays.
On September 9, 2011, the Company provided Evercore with
updated information regarding the recent underperformance of
certain business units of the Company, which would have a
negative impact upon its projected results. This updated
information, however, was not incorporated in the Final Case
Projections.
Projections
Provided to the Holdings Filing Persons and Moelis
In June 2011, Moelis received the Initial Financing Case
Projections, and in August 2011, Moelis received the Updated
Case Projections. In the presentations made by Moelis on each of
June 9, 2011 and September 9, 2011, Moelis, at the
direction of the Holdings Filing Persons, used projections with
respect to revenue, EBITDA and Capex, based on the Initial
Financing Case Projections and Updated Case Projections with
certain adjustments that were provided by management of the
Company. With respect to EBITDA, at the direction of Holdings,
Moelis utilized certain adjustments provided by management of
the Company that management felt reflected an estimate of future
cash EBITDA, which is referred to as Adjusted Cash
EBITDA. As a result of these adjustments, the projections
included in the presentations made by Moelis contain certain
differences from the projections included in the presentations
made by Evercore to the special committee, which differences in
the case of revenue and Capex are not material. The differences
between Adjusted Cash EBITDA, included in the projections used
by Moelis, and Adjusted EBITDA, included in the projections used
by Evercore, with respect to each of the Initial Financing Case
Projections and Updated Case Projections, are summarized below:
61
Initial
Financing Case Projections - Adjusted Cash EBITDA
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
|
|
|
Adjusted EBITDA (as used by
Evercore)
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
$
|
411
|
|
|
$
|
452
|
|
|
$
|
482
|
|
|
$
|
485
|
|
|
$
|
495
|
|
Mafco Flavors
|
|
|
30
|
|
|
|
32
|
|
|
|
35
|
|
|
|
39
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441
|
|
|
|
484
|
|
|
|
518
|
|
|
|
524
|
|
|
|
535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Restructuring Charges
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
Plus: Acquisition Accounting - Deferred
Revenue
(2)
|
|
|
11
|
|
|
|
6
|
|
|
|
4
|
|
|
|
3
|
|
|
|
1
|
|
Plus: VSOE Accounting
Adjustment
(3)
|
|
|
38
|
|
|
|
8
|
|
|
|
(17
|
)
|
|
|
0
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Cash
EBITDA (as used by Moelis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
|
470
|
|
|
|
476
|
|
|
|
480
|
|
|
|
498
|
|
|
|
505
|
|
Mafco Flavors
|
|
|
30
|
|
|
|
32
|
|
|
|
35
|
|
|
|
39
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
508
|
|
|
|
515
|
|
|
|
537
|
|
|
|
545
|
|
(1) Adjusted to exclude the
settlement of contingent claims.
(2) Includes deferred revenue
acquisition accounting from Parsam, GlobalScholar and Spectrum
K12 acquisitions.
(3) Includes Vendor Specific
Objective Evidence (VSOE) accounting addbacks from
GlobalScholar and Spectrum K12 acquisitions.
62
Updated
Case Projections - Adjusted Cash EBITDA
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
Projected
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
|
|
|
|
Adjusted EBITDA (as used by
Evercore)
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
$
|
411
|
|
|
$
|
427
|
|
|
$
|
454
|
|
|
$
|
443
|
|
|
$
|
451
|
|
Mafco Flavors
|
|
|
30
|
|
|
|
32
|
|
|
|
35
|
|
|
|
39
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441
|
|
|
|
459
|
|
|
|
489
|
|
|
|
482
|
|
|
|
491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Restructuring Charges
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
Plus: Acquisition Accounting - Deferred
Revenue
(2)
|
|
|
11
|
|
|
|
6
|
|
|
|
4
|
|
|
|
3
|
|
|
|
1
|
|
Plus: VSOE Accounting
Adjustment
(3)
|
|
|
35
|
|
|
|
18
|
|
|
|
(17
|
)
|
|
|
0
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Cash
EBITDA (as used by Moelis)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HCHC
|
|
|
467
|
|
|
|
461
|
|
|
|
451
|
|
|
|
456
|
|
|
|
461
|
|
Mafco Flavors
|
|
|
30
|
|
|
|
32
|
|
|
|
35
|
|
|
|
39
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
497
|
|
|
|
493
|
|
|
|
486
|
|
|
|
495
|
|
|
|
501
|
|
(1) Adjusted to exclude the
settlement of contingent claims.
(2) Includes deferred revenue
acquisition accounting from Parsam, GlobalScholar and Spectrum
K12 acquisitions.
(3) Includes Vendor Specific
Objective Evidence (VSOE) accounting addbacks from
GlobalScholar and Spectrum K12 acquisitions.
Certain
Effects of the Merger
If the Merger Agreement is approved by the required vote of the
Companys stockholders and other conditions to the closing
of the merger are either satisfied or waived, Merger Sub will be
merged with and into the Company, the separate corporate
existence of Merger Sub will cease and the Company will continue
its corporate existence under Delaware law as the surviving
corporation in the merger, with all of its and Merger Subs
rights, privileges, immunities, powers and franchises continuing
unaffected by the merger.
The Holdings Investors have agreed to contribute, immediately
prior to the effective time of the merger, 8,394,000 shares
of common stock held by them to Merger Sub in exchange for
shares of common stock of Merger Sub. Upon consummation of the
merger, each share of common stock issued and outstanding
immediately prior to the effective time of the merger (other
than excluded shares) will be converted into the right to
receive $25.00 in cash, without interest and less any applicable
withholding taxes. At the effective time of the merger, each
notional stock account with respect to common stock under our
Outside Directors Deferred Compensation Plan will be adjusted
pursuant to the terms of the plan such that the account ceases
to represent a notional investment in shares of common stock and
will be converted into a notional cash account equal to the
product of (x) the number of shares of common stock subject
to such stock account multiplied by (y) $25.00. At the
effective time of the merger, each excluded share and share of
the Companys series A preferred stock, par value
$0.01 per share, all of which shares of series A preferred
stock are held by the Company, will be automatically canceled
and cease to exist.
63
If the merger is completed, the entire equity in the surviving
corporation will be owned by the Holdings Investors and Parent,
and M & F Worldwides stockholders (other than
the Holdings Investors) will have no interest in M & F
Worldwides net book value or net earnings. The Holdings
Investors and Parent will be the sole beneficiaries of our
future net earnings and growth, if any, following the merger.
Similarly, the Holdings Investors and Parent will also bear the
risks of ongoing operations including the risks of any decrease
in our value after the merger. None of Parent, Merger Sub, the
Holdings Investors, the Company or Holdings will recognize any
gain or loss for United States federal income tax purposes as a
result of the merger.
After the completion of the merger, Mr. Perelmans
interest in the Companys net book value and net income or
loss will increase from approximately 43.4% to 100%. Based on
the Companys Quarterly Report on
Form 10-Q
for the nine months ended September 30, 2011, the following
table shows what Mr. Perelmans interests in the
Companys net book value and net earnings were as of
September 30, 2011, and what those interests would have
been had the merger been completed as of that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Perelmans Interest
|
|
|
Mr. Perelmans Interest
|
|
|
|
|
|
|
Before the Merger
|
|
|
After the Merger
|
|
|
|
Total
|
|
|
Dollars
|
|
|
Percent
|
|
|
Dollars
|
|
|
Percent
|
|
|
|
(dollars in millions)
|
|
Net income for the nine months ended September 30, 2011
|
|
$
|
94.6
|
|
|
$
|
41.1
|
|
|
|
43.4%
|
|
|
$
|
94.6
|
|
|
|
100%
|
|
Net book value as of September 30, 2011
|
|
$
|
732.6
|
|
|
$
|
317.9
|
|
|
|
43.4%
|
|
|
$
|
732.6
|
|
|
|
100%
|
|
In connection with the merger, certain of M & F
Worldwides directors and executive officers have interests
in the merger that are different from, or in addition to, the
interests of M & F Worldwides stockholders
generally, as described in more detail under
Interests
of the Companys Directors and Executive Officers in the
Merger
.
M & F Worldwides common stock is currently
registered under the Exchange Act and is quoted on NYSE under
the symbol MFW. As a result of the merger, the
Company will cease to be a publicly traded company and will be
wholly owned by the Holdings Investors and Parent. Following
consummation of the merger, registration of the common stock and
our reporting obligations under Exchange Act will be terminated
upon application to the SEC. In addition, upon consummation of
the merger, the common stock will no longer be listed on any
stock exchange or quotation system, including the NYSE.
At the effective time of the merger, M & F
Worldwides certificate of incorporation and bylaws will be
amended and restated to be in the same form as the certificate
of incorporation and bylaws, respectively, of Merger Sub as in
effect immediately prior to the effective time of the merger,
except that the name of the surviving corporation will be
M & F Worldwide Corp.
Interests
of the Companys Directors and Executive Officers in the
Merger
When considering the recommendation of the Companys board
of directors, you should be aware that the members of our board
of directors and our executive officers have interests in the
merger other than their interests as stockholders generally,
including those described below. These interests may be
different from, or in conflict with, your interests as a
stockholder of the Company. The members of our board of
directors and special committee were aware of these additional
interests, and considered them, when they approved the Merger
Agreement.
64
Mr. Perelmans
Interests
If the merger is completed, the common stock will be 100%
beneficially owned by Mr. Perelman, a director of the
Company. For a description of the treatment of the common stock
beneficially owned by Mr. Perelman in the merger and a
discussion of Mr. Perelmans continuing interest in
the Company, see
Special FactorsCertain Effects
of the Merger
.
Directors
of the Surviving Corporation
At the effective time of the merger, the directors of Merger Sub
immediately prior to the effective time of the merger will be
directors of the surviving corporation. The directors of Merger
Sub are Mr. Perelman and Mr. Schwartz, each of whom
currently serves on our board of directors.
Employment
with the Surviving Corporation Post Merger
It is expected that, immediately following the effective time of
the merger, the executive officers of the Company immediately
prior to the effective time of the merger will remain executive
officers of the surviving corporation. As of the date of this
proxy statement, none of our executive officers has entered into
any employment agreements with us or our subsidiaries in
anticipation of the merger, nor has any executive officer, who
has plans or is expected to remain with the surviving
corporation, entered into any agreement, arrangement or
understanding with Holdings or its affiliates regarding
employment with, or the right to purchase or participate in the
equity of, the surviving corporation.
Deferred
Compensation Plan Stock Accounts
Our non-employee directors are eligible to participate in the
Companys Outside Directors Deferred Compensation Plan. The
plan enables such directors to forego cash fees otherwise
payable to them in respect of their service as a director and to
have such fees credited at the end of each quarter in the form
of stock units, which will be payable in the form of stock or
cash, as elected by a director, when the director terminates
service as a director, or at such other time as he or she
elects. At the effective time of the merger, each notional stock
account with respect to common stock under the plan will be
adjusted pursuant to the terms of the plan such that the account
ceases to represent a notional investment in shares of common
stock and will be converted into a notional cash account equal
to the product of (x) the number of shares of common stock
subject to such stock account multiplied by (y) $25.00.
Compensation
of the Special Committee
In consideration of the additional time and effort required for
their service on the special committee, each member of the
special committee is being paid a one-time fee of $25,000 and a
per-meeting fee of $1,500. To date, there have been nine special
committee meetings. In addition, the members of the special
committee will also be reimbursed for their reasonable out of
pocket travel and other expenses in connection with their
service on the special committee. The special committee, at the
invitation of the independent directors, proposed such fees
after discussion with their legal advisors, and the board of
directors of the Company then unanimously approved the fees by
written consent.
Other than (i) their receipt of special committee
compensation (as described above) and compensation for serving
on the Companys board of directors, neither of which is
contingent upon the consummation of the merger or the special
committees or board of directors recommendation of
the merger, (ii) the treatment of their deferred
compensation plan stock accounts in the merger
65
(as described above) and (iii) the indemnification and
insurance arrangements with such directors following the
effective time (as described below), none of the members of the
special committee has a financial interest in the merger or any
of transactions contemplated thereby and none of them is related
to Holdings. The Companys board of directors did not place
any limitations on the authority of the special committee
regarding its investigation and evaluation of the proposed
transaction.
Indemnification
of Directors and Officers
For a description of the indemnification of directors and
officers by the Company following the merger, see
The
Merger AgreementOther Covenants and Agreements
.
In addition, you should be aware that Mr. Schwartz, a
director and the Chief Executive Officer of the Company,
Mr. Savas, the Chief Financial Officer of the Company, and
Mr. Bevins, a director of the Company, also serve as
officers
and/or
directors of Holdings and certain of its affiliates. See
Important Information Regarding M & F
Worldwide and its Directors and Executive Officers
as
well as
Agreements Involving Common Stock; Transactions
between Holdings Filing Persons and the CompanyManagement
Services Agreement
.
Financing
of the Merger
Parent estimates that the total amount of funds necessary to
complete the proposed merger and related transactions is
approximately $273.5 million plus fees and expenses. These
payments are expected to be funded by a combination of debt
financing, as described below, as well as funds available to the
surviving corporation at the effective time of the merger.
The consummation of the merger is not conditioned upon receipt
of any financing. Pursuant to the Merger Agreement, Parent and
Merger Sub have represented that they will have access to
sufficient funds to pay the aggregate merger consideration and
any other amounts payable under the Merger Agreement, including
fees and expenses incurred in connection therewith. The Company
is required to cooperate with Parent, at Parents cost and
expense, in connection with Parents efforts to obtain any
financing in connection with consummation of the merger
(provided that the requested cooperation is consistent with
applicable law and does not unreasonably interfere with the
operations of the Company and its subsidiaries), including by
participating in presentations, meetings or diligence sessions
with prospective lenders and assisting with the preparation of
financial statements and other materials requested by
prospective lenders.
Debt
Financing
In connection with the signing of the Merger Agreement, Holdings
received the Commitment Letter from Deutsche Bank, pursuant to
which, subject to the conditions set forth therein, Deutsche
Bank has committed to provide to Parent up to $250 million
through a senior secured term loan facility, referred to herein
as the Facility. On September 26, 2011,
Holdings received an extension letter from Deutsche Bank,
extending the term of the Commitment Letter to March 31,
2012.
The proceeds of the Facility will be used (i) to fund a
portion of the aggregate merger consideration and pay fees and
expenses incurred in connection therewith and
(ii) refinance
and/or
repay
existing indebtedness owed by certain subsidiaries of Holdings
to Deutsche Bank. Approximately $50 million of the proceeds
of the Facility will be used to refinance
and/or
repay
such existing indebtedness.
The definitive documentation governing the Facility has not been
finalized and, accordingly, the actual terms of the Facility may
differ from those described in this proxy statement.
66
General.
The borrower under the Facility will be
Parent. The Facility will be a $250 million term loan with
a term of 23 months available in a single drawdown on the
closing date of the merger.
Guarantor.
All obligations under the senior secured
credit facilities will be guaranteed by Holdings.
Conditions.
The commitment is conditioned on
(i) the consummation of the merger in accordance with the
Merger Agreement, (ii) since December 31, 2010, there
not having been any change, development or event that,
individually or in the aggregate, has had or would reasonably be
expected to have a material adverse effect on the operations,
business, properties, liabilities or financial condition of the
Company and its subsidiaries taken as a whole,
(iii) Holdings being in compliance with certain financial
covenants after giving effect to the merger and (iv) the
negotiation, execution and delivery of definitive documentation
with respect to the Facility, as well as other customary closing
conditions.
Security.
The Facility will be secured by a first
priority security interest in all the capital stock of the
Company, free and clear of all liens and encumbrances other than
liens and security interests of Deutsche Bank.
Interest Rate and Fees.
Loans under the Facility are
expected to bear interest, at the Borrowers option, at a
rate equal to LIBOR (London interbank offer rate) plus
(1) 2.50% for loans equal to or greater than $1,000,000 and
(2) the rate announced by Deutsche Bank as the prime
rate plus 1.00% for loans less than $1,000,000.
In connection with the Facility and the delivery and execution
of the Commitment Letter, Holdings has paid a delivery fee to
Deutsche Bank. Additionally, Parent will pay a customary
facility fee and utilization fee with respect to the Facility.
Prepayment and Amortization.
Parent will be
permitted to make voluntary prepayments at any time, without
premium or penalty (other than funding, breakage or unwind
costs, if applicable). The facility will be reduced by scheduled
amortization payments at 6, 9, 12, 15, 18 and
21-month
intervals from the closing of the Facility. Should amounts
outstanding under the Facility exceed a borrowing
base (calculated as a percentage of the market
value of the Company), Parent will be required to make
mandatory prepayments sufficient to bring the Facility into
compliance or, upon Deutsche Banks approval, pledge
additional collateral with sufficient value to bring the
Facility into compliance. No plans or arrangements to finance or
pay the Facility have been made.
Other terms.
The Facility will include customary
representations, warranties, covenants and events of default for
a facility of its type and size. Covenants will include, among
others, compliance with laws, financial reporting requirements
and restrictions on incurrence of liens and indebtedness,
transfer of assets, payments of dividends and other
distributions. No alternative financing arrangements have been
made in the event that the Facility is not available as
anticipated.
Material
United States Federal Income Tax Consequences
The following is a general discussion of the material
U.S. federal income tax consequences of the merger to
U.S. holders (as defined below) of common stock whose
shares are converted into the right to receive the merger
consideration. This discussion does not address
U.S. federal income tax consequences with respect to
non-U.S. holders.
We base this summary on the provisions of the Internal Revenue
Code, applicable U.S. Treasury Regulations, judicial
authority, and administrative rulings and practice, all of which
are subject to change, possibly on a retroactive basis. This
discussion is not binding on the Internal Revenue Service or the
courts and, therefore, could be
67
subject to challenge, which could be sustained. No ruling is
intended to be sought from the Internal Revenue Service with
respect to the merger.
For purposes of this discussion, we use the term
U.S. holder to mean a beneficial owner of
common stock that is:
|
|
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|
|
a citizen or individual resident of the U.S. for
U.S. federal income tax purposes;
|
|
|
|
a corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws of the U.S. or any state or the District
of Columbia;
|
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|
|
a trust if it (1) is subject to the primary supervision of
a court within the U.S. and one or more U.S. persons
have the authority to control all substantial decisions of the
trust or (2) has a valid election in effect under
applicable U.S. Treasury Regulations to be treated as a
U.S. person; or
|
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|
an estate the income of which is subject to U.S. federal
income tax regardless of its source.
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This discussion assumes that a U.S. holder holds the shares
of common stock as a capital asset within the meaning of
Section 1221 of the Internal Revenue Code (generally,
property held for investment). This discussion does not address
all aspects of U.S. federal income tax that may be relevant
to a U.S. holder in light of its particular circumstances,
or that may apply to a U.S. holder that is subject to
special treatment under the U.S. federal income tax laws
(including, for example, insurance companies, dealers in
securities or foreign currencies, traders in securities who
elect the
mark-to-market
method of accounting for their securities, U.S. holders
subject to the alternative minimum tax, persons that have a
functional currency other than the U.S. dollar, tax-exempt
organizations, financial institutions, mutual funds, controlled
foreign corporations, passive foreign investment companies,
certain expatriates, corporations that accumulate earnings to
avoid U.S. federal income tax, U.S. holders who hold
shares of common stock as part of a hedge, straddle,
constructive sale or conversion transaction, U.S. holders
who will hold, directly or indirectly, an equity interest in the
surviving corporation or U.S. holders who acquired their
shares of common stock through the exercise of employee stock
options or other compensation arrangements). In addition, the
discussion does not address any tax considerations under state,
local or foreign laws or U.S. federal laws other than those
pertaining to the U.S. federal income tax that may apply to
U.S. holders. U.S. holders are urged to consult their
own tax advisors to determine the particular tax consequences,
including the application and effect of any state, local or
foreign income and other tax laws, of the receipt of cash in
exchange for common stock pursuant to the merger.
If a partnership holds common stock, the tax treatment of a
partner will generally depend on the status of the partners and
the activities of the partnership. If you are a partner of a
partnership holding common stock, you should consult your tax
advisor.
The receipt of cash in the merger by U.S. holders of common
stock will be a taxable transaction for U.S. federal income
tax purposes. In general, for U.S. federal income tax
purposes, a U.S. holder of common stock will recognize gain
or loss equal to the difference between:
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the amount of cash received in exchange for the common
stock; and
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the U.S. holders adjusted tax basis in the common
stock.
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If the holding period in common stock surrendered in the merger
is greater than one year as of the date of the merger, the gain
or loss will be long-term capital gain or loss. Long term
capital gains of non-corporate holders, including individuals,
are eligible for reduced rates of taxation. The
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deductibility of a capital loss recognized on the exchange is
subject to limitations under the Internal Revenue Code. If a
U.S. holder acquired different blocks of common stock at
different times and different prices, such holder must determine
its adjusted tax basis and holding period separately with
respect to each block of common stock.
Under the Internal Revenue Code, a U.S. holder of common
stock may be subject, under certain circumstances, to
information reporting on the cash received in the merger unless
such U.S. holder is a corporation or other exempt
recipient. Backup withholding will also apply (currently at a
rate of 28%) with respect to the amount of cash received, unless
a U.S. holder provides proof of an applicable exemption or
a correct taxpayer identification number, and otherwise complies
with the applicable requirements of the backup withholding
rules. Backup withholding is not an additional tax and any
amounts withheld under the backup withholding rules may be
refunded or credited against a U.S. holders
U.S. federal income tax liability, if any, provided that
such U.S. holder furnishes the required information to the
Internal Revenue Service in a timely manner.
Regulatory
Approvals
Under the
Hart-Scott-Rodino
Act and the rules and regulations promulgated thereunder, the
merger could not be completed until the early termination or the
expiration of a
30-day
waiting period (unless a request for additional information and
documentary material had been received from the Federal Trade
Commission, referred to herein as FTC or the
Antitrust Division of the U.S. Department of Justice,
referred to herein as the Antitrust Division, or
unless early termination of the waiting period had been granted)
following the filing of notification and report forms with the
FTC and the Antitrust Division by the Company and
Mr. Perelman.
The Company and Mr. Perelman each filed their respective
notification and report forms with the FTC and the Antitrust
Division under the
Hart-Scott-Rodino
Act on September 21, 2011. On September 30, 2011,
early termination of the waiting period under the
Hart-Scott-Rodino
Act regarding Mr. Perelmans acquisition of shares of
common stock pursuant to the merger was granted.
At any time before or after the merger, the Antitrust Division,
the FTC, a state attorney general, or a foreign competition
authority could take action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking
to enjoin the merger or seeking divestiture of substantial
assets of the Company or Merger Sub or their subsidiaries.
Private parties may also bring legal actions under the antitrust
laws under certain circumstances. Notwithstanding the expiration
of the waiting period, there can be no assurance that a
challenge to the merger on antitrust grounds will not be made
or, if a challenge is made, of the result of such challenge.
Anticipated
Accounting Treatment of the Merger
M & F Worldwide, as surviving corporation, will
account for the merger as a business combination using the
purchase method of accounting for financial accounting purposes,
whereby the estimated purchase price would be allocated to the
assets and liabilities of M & F Worldwide based on
their relative fair values following FASB Accounting Standards
Codification Topic 805, Business Combinations.
Litigation
Following the announcement on June 13, 2011 by Holdings of
its proposal to acquire the outstanding shares of the
Companys common stock not owned by it for cash, three
purported shareholders each filed complaints in the Delaware
Court of Chancery, beginning on June 14, 2011,
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and two complaints were filed by purported shareholders in the
Supreme Court of the State of New York, beginning on
June 17, 2011.
On July 14, 2011, the Delaware Court of Chancery granted an
order consolidating the Delaware Actions and appointing co-lead
counsel.
On September 14, 2011, the Delaware Court of Chancery
granted a Stipulated Order of Class Certification and Case
Management, which, among other things, certified the
Consolidated Delaware Action as a class action pursuant to
Delaware Court of Chancery Rules 23(a), 23(b)(1), and
23(b)(2) without opt-out rights. The class consists of all
persons who held shares of common stock (excluding defendants
named in the Consolidated Delaware Action and any person, firm,
trust, corporation or other entity affiliated with any of the
defendants) at any time during the period from and including
June 13, 2011, through the date of consummation of the
merger.
On September 15, 2011, the Supreme Court of the State of
New York granted defendants cross-motion to dismiss or
stay one of the New York actions without prejudice to that
plaintiffs right to seek to intervene in the Consolidated
Delaware Action.
On the same day, the co-lead plaintiffs in the Consolidated
Action filed the Consolidated Complaint. The Consolidated
Complaint alleges that each of the members of the Companys
board of directors breached their fiduciary duties, and further
asserts claims for unfair dealing and breach of
fiduciary duty against Mr. Perelman and Holdings. The
Consolidated Complaint seeks, among other things, to
preliminarily and permanently enjoin the defendants from
effectuating the merger, along with a declaration that the
members of the board breached their fiduciary duties, an
accounting, rescissory damages, costs and fees.
On September 23, 2011, the parties to the remaining New
York action entered into a stipulation discontinuing that action
without prejudice and without prejudice to plaintiffs
right to seek to intervene in the Consolidated Delaware Action.
On November 14, 2011, the Delaware Court of Chancery
entered a scheduling order, which set December 14, 2011 as
the date for the preliminary injunction hearing.
Defendants believe that the claims in the Consolidated Complaint
are entirely without merit and intend to defend these actions
vigorously.
Dissenters
Rights of Appraisal
The following discussion summarizes the material terms of the
law pertaining to appraisal rights under the Delaware General
Corporation Law, referred to herein as DGCL, and is
qualified in its entirety by the full text of Section 262
of the DGCL, referred to herein as Section 262,
which is attached to this proxy statement as Annex C. The
following summary does not constitute legal or other advice, nor
does it constitute a recommendation that stockholders exercise
their appraisal rights under Section 262.
Under Section 262, holders of shares of capital stock who
do not vote in favor of the approval of the Merger Agreement and
who otherwise follow the procedures set forth in
Section 262 will be entitled to have their shares appraised
by the Delaware Court of Chancery and to receive payment in cash
of the fair value of the shares, exclusive of any
element of value arising from the accomplishment or expectation
of the merger, as determined by the Court, together with
interest, if any, to be paid upon the amount determined to be
the fair value.
Under Section 262, where a Merger Agreement is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
must notify each of its
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stockholders entitled to appraisal rights that appraisal rights
are available and include in the notice a copy of
Section 262. This proxy statement shall constitute such
notice, and the full text of Section 262 is attached to
this proxy statement as Annex C.
ANY HOLDER OF CAPITAL STOCK WHO WISHES TO EXERCISE APPRAISAL
RIGHTS, OR WHO WISHES TO PRESERVE SUCH HOLDERS RIGHT TO DO
SO, SHOULD CAREFULLY REVIEW THE FOLLOWING DISCUSSION AND
ANNEX C BECAUSE FAILURE TO TIMELY AND PROPERLY COMPLY WITH
THE PROCEDURES SPECIFIED WILL RESULT IN THE LOSS OF APPRAISAL
RIGHTS. MOREOVER, BECAUSE OF THE COMPLEXITY OF THE PROCEDURES
FOR EXERCISING THE RIGHT TO SEEK APPRAISAL OF SHARES OF
CAPITAL STOCK, M & F WORLDWIDE BELIEVES THAT, IF A
STOCKHOLDER CONSIDERS EXERCISING SUCH RIGHTS, SUCH STOCKHOLDER
SHOULD SEEK THE ADVICE OF LEGAL COUNSEL.
Filing Written Demand.
Any holder of capital stock
wishing to exercise appraisal rights must, before the vote on
the approval of the Merger Agreement at the special meeting at
which the proposal to approve the Merger Agreement will be
submitted to the stockholders, deliver to M & F
Worldwide a written demand for the appraisal of the
stockholders shares, and not vote in favor of the approval
of the Merger Agreement. A holder of capital stock wishing to
exercise appraisal rights must hold of record the shares on the
date the written demand for appraisal is made and must continue
to hold the shares of record through the effective date of the
merger, since appraisal rights will be lost if the shares are
transferred prior to the effective date of the merger. The
holder must not vote in favor of the approval of the Merger
Agreement. A proxy that is submitted and does not contain voting
instructions will, unless revoked, be voted in favor of the
approval of the Merger Agreement, and it will constitute a
waiver of the stockholders right of appraisal and will
nullify any previously delivered written demand for appraisal.
Therefore, a stockholder who submits a proxy and who wishes to
exercise appraisal rights must submit a proxy containing
instructions to vote against the approval of the Merger
Agreement or abstain from voting on the approval of the Merger
Agreement. Neither voting against the approval of the Merger
Agreement, nor abstaining from voting or failing to vote on the
proposal to approve the Merger Agreement, will in and of itself
constitute a written demand for appraisal satisfying the
requirements of Section 262. The written demand for
appraisal must be in addition to and separate from any proxy or
vote on the approval of the Merger Agreement. The demand must
reasonably inform M & F Worldwide of the identity of
the holder as well as the intention of the holder to demand an
appraisal of the fair value of the shares held by
the holder. A stockholders failure to make the written
demand prior to the taking of the vote on the approval of the
Merger Agreement at the special meeting of stockholders will
constitute a waiver of appraisal rights.
Only a holder of record of shares of capital stock is entitled
to demand an appraisal of the shares registered in that
holders name. A demand for appraisal in respect of shares
of capital stock should be executed by or on behalf of the
holder of record, fully and correctly, as the holders name
appears on the holders stock certificates, should specify
the holders name and mailing address and the number of
shares registered in the holders name and must state that
the person intends thereby to demand appraisal of the
holders shares in connection with the merger. If the
shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of the demand should
be made in that capacity, and if the shares are owned of record
by more than one person, as in a joint tenancy and tenancy in
common, the demand should be executed by or on behalf of all
joint owners. An authorized agent, including an agent for two or
more joint owners, may execute a demand for appraisal on behalf
of a holder of record; however, the agent must identify the
record
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owner or owners and expressly disclose that, in executing the
demand, the agent is acting as agent for the record owner or
owners. If the shares are held in street name by a
broker, bank or nominee, the broker, bank or nominee may
exercise appraisal rights with respect to the shares held for
one or more beneficial owners while not exercising the rights
with respect to the shares held for other beneficial owners; in
such case, however, the written demand should set forth the
number of shares as to which appraisal is sought and where no
number of shares is expressly mentioned the demand will be
presumed to cover all shares of capital stock held in the name
of the record owner. Stockholders who hold their shares in
brokerage accounts or other nominee forms and who wish to
exercise appraisal rights are urged to consult with their
brokers to determine the appropriate procedures for the making
of a demand for appraisal by such a nominee.
All written demands for appraisal pursuant to Section 262
should be sent or delivered to M & F Worldwide at:
M & F Worldwide Corp.
35 East 62nd Street
New York, NY 10065
Attn: Secretary
At any time within 60 days after the effective date of the
merger, any stockholder who has not commenced an appraisal
proceeding or joined that proceeding as a named party may
withdraw his, her or its demand for appraisal and accept the
consideration offered pursuant to the Merger Agreement by
delivering to M & F Worldwide, as the surviving
corporation, a written withdrawal of the demand for appraisal.
However, any such attempt to withdraw the demand made more than
60 days after the effective date of the merger will require
written approval of M & F Worldwide, as the surviving
corporation. No appraisal proceeding in the Delaware Court of
Chancery will be dismissed as to any stockholder without the
approval of the Delaware Court of Chancery, and such approval
may be conditioned upon such terms as the Court deems just;
provided, however, that any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party
may withdraw his, her or its demand for appraisal and accept the
merger consideration offered pursuant to the Merger Agreement
within 60 days after the effective date of the merger. If
M & F Worldwide, as the surviving
corporation, does not approve a request to withdraw a demand for
appraisal when that approval is required, or, except with
respect to any stockholder who withdraws such stockholders
right to appraisal in accordance with the proviso in the
immediately preceding sentence, if the Delaware Court of
Chancery does not approve the dismissal of an appraisal
proceeding, the stockholder will be entitled to receive only the
appraised value determined in any such appraisal proceeding,
which value could be less than, equal to or more than the
consideration being offered pursuant to the Merger Agreement.
Notice by the Surviving Corporation.
Within ten days
after the effective date of the merger, M & F
Worldwide as the surviving corporation must notify each holder
of capital stock who has made a written demand for appraisal
pursuant to Section 262, and who has not voted in favor of
the approval of the Merger Agreement, that the merger has become
effective.
Filing a Petition for Appraisal.
Within
120 days after the effective date of the merger, but not
thereafter, M & F Worldwide as the surviving
corporation or any holder of capital stock who has complied with
Section 262 and is entitled to appraisal rights under
Section 262 may commence an appraisal proceeding by filing
a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares held by all
dissenting holders. M & F Worldwide as the
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surviving corporation is under no obligation to and has no
present intention to file a petition and holders should not
assume that M & F Worldwide as the surviving
corporation will file a petition. Accordingly, it is the
obligation of the holders of capital stock to initiate all
necessary action to perfect their appraisal rights in respect of
shares of capital stock within the time prescribed in
Section 262. Within 120 days after the effective date
of the merger, any holder of capital stock who has complied with
the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from M & F
Worldwide as the surviving corporation a statement setting forth
the aggregate number of shares not voted in favor of the
approval of the Merger Agreement and with respect to which
demands for appraisal have been received and the aggregate
number of holders of such shares. The statement must be mailed
within ten days after a written request therefor has been
received by M & F Worldwide as the surviving
corporation or within ten days after the expiration of the
period for delivery of demands for appraisal, whichever is
later. Notwithstanding the foregoing, a person who is the
beneficial owner of shares of capital stock held either in a
voting trust or by a nominee on behalf of such person may, in
such persons own name, file a petition or request from
M & F Worldwide as the surviving corporation the
statement described in this paragraph.
If a petition for an appraisal is timely filed by a holder of
shares of capital stock and a copy thereof is served upon
M & F Worldwide as the surviving corporation,
M & F Worldwide as the surviving corporation will then
be obligated within 20 days to file with the Delaware
Register in Chancery a duly verified list containing the names
and addresses of all stockholders who have demanded an appraisal
of their shares and with whom agreements as to the value of
their shares have not been reached. After notice to the
stockholders as required by the court, the Delaware Court of
Chancery is empowered to conduct a hearing on the petition to
determine those stockholders who have complied with
Section 262 and who have become entitled to appraisal
rights thereunder. The Delaware Court of Chancery may require
the stockholders who demanded payment for their shares to submit
their stock certificates to the Register in Chancery for
notation thereon of the pendency of the appraisal proceeding;
and if any stockholder fails to comply with the direction, the
Delaware Court of Chancery may dismiss the proceedings as to the
stockholder.
Determination of Fair Value.
After the Delaware
Court of Chancery determines the holders of capital stock
entitled to appraisal, the appraisal proceeding shall be
conducted in accordance with the rules of the Delaware Court of
Chancery, including any rules specifically governing appraisal
proceedings. Through such proceeding, the Court shall determine
the fair value of the shares, exclusive of any
element of value arising from the accomplishment or expectation
of the merger, together with interest, if any, to be paid upon
the amount determined to be the fair value. Unless the Court in
its discretion determines otherwise for good cause shown,
interest from the effective date of the merger through the date
of payment of the judgment shall be compounded quarterly and
shall accrue at 5% over the Federal Reserve discount rate
(including any surcharge) as established from time to time
during the period between the effective date of the merger and
the date of payment of the judgment.
In determining fair value, the Delaware Court of Chancery will
take into account all relevant factors. In
Weinberger v.
UOP, Inc.
, the Supreme Court of Delaware discussed the
factors that could be considered in determining fair value in an
appraisal proceeding, stating that proof of value by any
techniques or methods that are generally considered acceptable
in the financial community and otherwise admissible in
court should be considered, and that fair price
obviously requires consideration of all relevant factors
involving the value of a company. The Delaware Supreme
Court stated that, in making this determination of fair value,
the court must consider market value, asset value, dividends,
earnings prospects, the nature of the enterprise and any other
facts that could
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be ascertained as of the date of the merger that throw any light
on future prospects of the merged corporation. Section 262
provides that fair value is to be exclusive of any element
of value arising from the accomplishment or expectation of the
merger. In
Cede & Co. v. Technicolor,
Inc.
, the Delaware Supreme Court stated that such exclusion
is a narrow exclusion [that] does not encompass known
elements of value, but which rather applies only to the
speculative elements of value arising from such accomplishment
or expectation. In Weinberger, the Supreme Court of Delaware
also stated that elements of future value, including the
nature of the enterprise, which are known or susceptible of
proof as of the date of the merger and not the product of
speculation, may be considered.
Stockholders considering seeking appraisal should be aware that
the fair value of their shares as so determined could be more
than, the same as or less than the consideration they would
receive pursuant to the merger if they did not seek appraisal of
their shares and that an investment banking opinion as to
fairness from a financial point of view is not necessarily an
opinion as to fair value under Section 262. Although
M & F Worldwide believes that the merger consideration
is fair, no representation is made as to the outcome of the
appraisal of fair value as determined by the Delaware Court of
Chancery, and stockholders should recognize that such an
appraisal could result in a determination of a value higher or
lower than, or the same as, the merger consideration. Neither
the Holdings Filing Persons nor M & F Worldwide
anticipate offering more than the applicable merger
consideration to any stockholder of M & F Worldwide
exercising appraisal rights, and reserve the right to assert, in
any appraisal proceeding, that for purposes of Section 262,
the fair value of a share of capital stock is less
than the applicable merger consideration. In addition, the
Delaware courts have decided that the statutory appraisal
remedy, depending on factual circumstances, may or may not be a
dissenting stockholders exclusive remedy.
If a petition for appraisal is not timely filed, then the right
to an appraisal will cease. The costs of the action (which do
not include attorneys fees or the fees and expenses of
experts) may be determined by the Court and taxed upon the
parties as the Court deems equitable under the circumstances.
Upon application of a stockholder, the Court may order all or a
portion of the expenses incurred by a stockholder in connection
with an appraisal proceeding, including, without limitation,
reasonable attorneys fees and the fees and expenses of
experts utilized in the appraisal proceeding, to be charged pro
rata against the value of all the shares entitled to be
appraised.
If any stockholder who demands appraisal of shares of capital
stock under Section 262 fails to perfect, successfully
withdraws or loses such holders right to appraisal, the
stockholders shares of capital stock will be deemed to
have been converted at the effective date of the merger into the
right to receive the merger consideration pursuant to the Merger
Agreement. A stockholder will fail to perfect, or effectively
lose, the holders right to appraisal if no petition for
appraisal is filed within 120 days after the effective date
of the merger. In addition, as indicated above, a stockholder
may withdraw his, her or its demand for appraisal in accordance
with Section 262 and accept the merger consideration
offered pursuant to the Merger Agreement.
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CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING
INFORMATION
This proxy statement, and the documents incorporated by
reference in this proxy statement, include forward-looking
statements that reflect our current views as to future
events and financial performance with respect to our operations,
the expected completion and timing of the merger and other
information relating to the merger. These statements can be
identified by the fact that they do not relate strictly to
historical or current facts. There are forward-looking
statements throughout this proxy statement, including, among
others, under the headings
Summary Term
Sheet
,
Questions and Answers About the
Special Meeting
,
Special Meeting
,
Special Factors
, and
Important
Information Regarding M & F Worldwide and its
Directors and Executive Officers
, and in statements
containing the words aim, anticipate,
are confident, estimate,
expect, will be, will
continue, will likely result,
project, intend, plan,
believe and other words and terms of similar meaning
in conjunction with a discussion of future operating or
financial performance. You should be aware that forward-looking
statements involve known and unknown risks and uncertainties.
Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we cannot assure you
that the actual results or developments we anticipate will be
realized, or even if realized, that they will have the expected
effects on the business or operations of the Company. These
forward-looking statements speak only as of the date on which
the statements were made and we undertake no obligation to
update or revise any forward-looking statements made in this
proxy statement or elsewhere as a result of new information,
future events or otherwise, except as required by law. In
addition to other factors and matters contained in or
incorporated by reference in this document, we believe the
following factors could cause actual results to differ
materially from those discussed in the forward-looking
statements:
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the occurrence of any event, change or other circumstance that
could give rise to the termination of the Merger Agreement;
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the outcome of any legal proceedings that have been or may be
instituted against the Company and others relating to the Merger
Agreement;
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the inability to complete the merger due to the failure to
obtain stockholder approval (including the approval of holders
of a majority of the outstanding shares of common stock
(excluding shares owned by Holdings or its affiliates)) or the
failure to satisfy other conditions to consummation of the
merger, including the expiration of the waiting period under the
Hart-Scott-Rodino
Act;
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the failure of the merger to close for any other reason;
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the risk that the pendency of the merger disrupts current plans
and operations and the potential difficulties in employee
retention as a result of the pendency of the merger;
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the fact that directors and officers of M & F
Worldwide have interests in the merger that are different from,
or in addition to, the interests of M & F Worldwide
stockholders generally in recommending that M & F
Worldwide stockholders vote to approve the Merger Agreement;
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the effect of the announcement of the merger on our client and
customer relationships, operating results and business generally;
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the amount of the costs, fees, expenses and charges related to
the merger;
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and other risks detailed in our filings with the SEC, including
our most recent filings on
Forms 10-Q
and
10-K.
See
Where You Can Find Additional
Information
. Many of the factors that will determine
our future results are beyond our ability to control or predict.
In light of the significant uncertainties inherent in the
forward-looking statements contained herein, readers should not
place undue reliance on forward-looking statements, which
reflect managements views only as of the date hereof. We
cannot guarantee any future results, levels of activity,
performance or achievements.
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THE
SPECIAL MEETING
Time,
Place and Purpose of the Special Meeting
This proxy statement is being furnished to our stockholders as
part of the solicitation of proxies by our board of directors
for use at the special meeting to be held on December 21, 2011,
starting at 10:00 a.m. local time at Skadden, Arps, Slate,
Meagher & Flom LLP, Four Times Square, New York, NY
10036, or at any adjournment or postponement thereof.
The purpose of the special meeting is for our stockholders to
consider and vote upon the approval of the Merger Agreement. Our
stockholders must approve the Merger Agreement for the merger to
occur. If our stockholders fail to approve the Merger Agreement,
the merger will not occur. A copy of the Merger Agreement is
attached to this proxy statement as Annex A. This proxy
statement and the enclosed form of proxy are first being mailed
to our stockholders on or about November 21, 2011.
Record
Date and Quorum
The holders of record of common stock as of the close of
business on November 14, 2011, the record date for the
special meeting, are entitled to receive notice of and to vote
at the special meeting. On the record date,
19,333,931 shares of common stock were outstanding.
The presence at the special meeting, in person or by proxy, of
the holders of a majority of shares of common stock outstanding
on the record date will constitute a quorum, permitting the
Company to conduct its business at the special meeting. Any
shares of common stock held in treasury by the Company or by any
of our subsidiaries are not considered to be outstanding for
purposes of determining a quorum. Once a share is represented at
the special meeting, it will be counted for the purpose of
determining a quorum at the special meeting and any adjournment
or postponement of the special meeting. However, if a new record
date is set for the adjourned special meeting, then a new quorum
will have to be established. Proxies received but marked as
abstentions and broker non-votes, if any, will be included in
the calculation of the number of shares considered to be present
at the special meeting.
Required
Vote
For the Company to complete the merger, under Delaware law,
stockholders holding at least a majority in voting power of the
common stock outstanding at the close of business on the record
date must vote FOR the approval of the Merger
Agreement. In addition, it is a condition to the consummation of
the merger that stockholders holding at least a majority in
voting power of common stock outstanding at the close of
business on the record date and not owned by excluded
stockholders must vote FOR the approval of the
Merger Agreement. A failure to vote your shares of common stock
or an abstention from voting will have the same effect as a vote
against the merger.
As of the record date, there were 19,333,931 shares of
common stock outstanding, of which Mr. Perelman may be
deemed to beneficially own 8,394,000 shares (consisting of
7,248,000 shares of common stock held through MFW Holdings
One, 1,012,666 shares of common stock held through MFW
Holdings Two, and 133,334 shares of common stock held
directly by Mr. Perelman), representing in the aggregate
approximately 43.4% of the outstanding shares of common stock as
of the record date.
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The Holdings Investors have agreed to contribute immediately
prior to the effective time of the merger the shares of common
stock held by them to Merger Sub in exchange for shares of
common stock of Merger Sub. See
Agreements Involving
Common Stock; Transactions Between Holdings Filing Persons and
the CompanyContribution Agreement
. Holdings has
agreed to vote all shares of common stock beneficially owned by
it in favor of approving the Merger Agreement.
In addition, excluded stockholders other than the Holdings
Investors own an additional 16,000 shares of common stock,
and have each agreed to vote such shares in favor of approving
the Merger Agreement. See
Important Information
Regarding M & F Worldwide and its Directors and
Executive Officers
.
Because the excluded stockholders may be deemed to beneficially
own 8,410,000 shares of common stock, an additional
5,461,966 shares of common stock (representing a majority
of the outstanding shares held by stockholders other than the
excluded stockholders), or approximately 28.25% of the
outstanding shares of common stock, must vote in favor of the
Merger Agreement to satisfy the required vote under the Merger
Agreement. The directors and current executive officers of the
Company (other than any such director or executive officer who
is an excluded stockholder), all of whom have expressed their
intent to vote in favor of the proposal to approve the Merger
Agreement because they view the merger as an attractive
opportunity to receive cash for their shares of common stock at
a premium to recent market prices, may be deemed to beneficially
own an additional 194,316 shares of common stock (not
including shares held through the Outside Directors Deferred
Compensation Plan). Except in their capacities as members of the
board of directors of the Company, as applicable, no officer of
the Company nor any Holdings Filing Person has made any
recommendation either in support of or opposed to the merger or
the Merger Agreement.
Voting;
Proxies; Revocation
Attendance
All holders of shares of common stock as of the close of
business on November 14, 2011, the record date for voting
at the special meeting, including stockholders of record and
beneficial owners of common stock registered in the street
name of a bank, broker or other nominee, are invited to
attend the special meeting. If you are a stockholder of record,
please be prepared to provide proper identification, such as a
drivers license. If you hold your shares in street
name, you will need to provide proof of ownership, such as
a recent account statement or letter from your bank, broker or
other nominee, along with proper identification.
Voting in
Person
Stockholders of record will be able to vote in person at the
special meeting. If you are not a stockholder of record, but
instead hold your shares in street name through a
bank, broker or other nominee, you must provide a proxy executed
in your favor from your bank, broker or other nominee in order
to be able to vote in person at the special meeting.
Voting by
Proxy
To ensure that your shares are represented at the special
meeting, we recommend that you vote promptly by proxy, even if
you plan to attend the special meeting in person.
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If you are a stockholder of record, you may vote by proxy using
one of the methods described below.
Vote by Telephone or via the Internet.
This proxy
statement/prospectus is accompanied by a proxy card with
instructions for voting. You may vote by telephone by calling
the toll-free number or via the Internet by accessing the
Internet address as specified on the enclosed proxy card. Your
shares will be voted as you direct in the same manner as if you
had completed, signed, dated and returned your proxy card, as
described below.
Vote by Proxy Card.
If you complete, sign, date and
return the enclosed proxy card by mail so that it is received
before the special meeting, your shares will be voted in the
manner directed by you on your proxy card.
If you sign, date and return your proxy card without indicating
how you wish to vote, your proxy will be voted in favor of the
approval of the Merger Agreement and the proposal to adjourn the
special meeting, if necessary or appropriate, to solicit
additional proxies. If you fail to return your proxy card, the
effect will be that your shares will not be counted for purposes
of determining whether a quorum is present at the special
meeting (unless you are a record holder as of the record date
and attend the special meeting in person) and will have the same
effect as a vote against the approval of the Merger Agreement,
but will not affect the vote regarding the adjournment of the
special meeting, if necessary or appropriate, to solicit
additional proxies.
If your shares are held by a bank, broker or other nominee on
your behalf in street name, your bank, broker or
other nominee will send you instructions as to how to vote your
shares by proxy. Many banks and brokerage firms have a process
for their customers to provide voting instructions by telephone
or via the Internet, in addition to providing for a vote by
proxy card.
In accordance with the rules of the NYSE, banks, brokers and
other nominees who hold shares of common stock in street
name for their customers do not have discretionary
authority to vote the shares with respect to the approval of the
Merger Agreement. Accordingly, if banks, brokers or other
nominees do not receive specific voting instructions from the
beneficial owner of such shares they may not vote such shares
with respect to the approval of the Merger Agreement. Under such
circumstance, a broker non-vote would arise. Broker
non-votes, if any, will be counted for purposes of determining
whether a quorum is present at the special meeting and will have
the same effect as a vote against the approval of the Merger
Agreement and the proposal regarding the adjournment of the
special meeting, if necessary or appropriate, to solicit
additional proxies. For shares of common stock held in
street name, only shares of common stock
affirmatively voted FOR approval of the Merger
Agreement will be counted as a favorable vote for such proposal.
Revocation
of Proxies
Your proxy is revocable. If you are a stockholder of record, you
may revoke your proxy at any time before the vote is taken at
the special meeting by:
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submitting a new proxy with a later date, by using the telephone
or Internet voting procedures described above, or by completing,
signing, dating and returning a new proxy card by mail to the
Company;
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attending the special meeting and voting in person; or
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sending written notice of revocation to the Corporate Secretary
of M & F Worldwide Corp., 35 East 62nd Street,
New York, New York 10065.
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Attending the special meeting without taking one of the actions
described above will not in itself revoke your proxy. Please
note that if you want to revoke your proxy by mailing a new
proxy card to the Company or by sending a written notice of
revocation to the Company, you should ensure that you send your
new proxy card or written notice of revocation in sufficient
time for it to be received by the Company before the day of the
special meeting.
If you hold your shares in street name through a
bank, broker or other nominee, you will need to follow the
instructions provided to you by your bank, broker or other
nominee in order to revoke your proxy or submit new voting
instructions.
Abstentions
Abstentions will be included in the calculation of the number of
shares of common stock represented at the special meeting for
purposes of determining whether a quorum has been achieved.
Abstaining from voting will have the same effect as a vote
AGAINST the proposal to approve the Merger Agreement.
Adjournments
and Postponements
Although it is not currently expected, the special meeting may
be adjourned or postponed for the purpose of soliciting
additional proxies. In the event that there is present, in
person or by proxy, sufficient favorable voting power to secure
the vote of the stockholders of the Company necessary to approve
the Merger Agreement, the Company does not anticipate that we
will adjourn or postpone the special meeting unless the Company
is advised by counsel that failure to do so could reasonably be
expected to result in a violation of U.S. federal
securities laws. Any signed proxies received by the Company in
which no voting instructions are provided on such matter will be
voted in favor of an adjournment in these circumstances. Any
adjournment or postponement of the special meeting for the
purpose of soliciting additional proxies will allow the
Companys stockholders who have already sent in their
proxies to revoke them at any time prior to their use at the
special meeting as adjourned or postponed.
Solicitation
of Proxies
We will bear the cost of solicitation of proxies. This includes
the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of our
outstanding common stock. We may solicit proxies by mail,
personal interview,
e-mail,
telephone, or via the Internet. The Company has retained D.F.
King & Co., Inc., a proxy solicitation firm, to assist
it in the solicitation of proxies for the special meeting and
will pay D.F. King & Co., Inc. a customary fee, plus
reimbursement of
out-of-pocket
expenses.
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THE
MERGER AGREEMENT
The following is a summary of the material provisions of the
Merger Agreement, a copy of which is attached to this proxy
statement as Annex A and which we incorporate by reference
into this proxy statement. This summary may not contain all of
the information about the Merger Agreement that is important to
you. We encourage you to read carefully the Merger Agreement in
its entirety, as the rights and obligations of the parties are
governed by the express terms of the Merger Agreement and not by
this summary or any other information contained in this proxy
statement
.
Parties
to the Merger Agreement
The parties to the Merger Agreement are M & F
Worldwide, Parent, Merger Sub, and, solely for purposes of
guaranteeing the performance by Parent and Merger Sub, agreeing
to vote shares of common stock beneficially owned by it and
certain miscellaneous provisions set forth therein, Holdings.
For information regarding M & F Worldwide, see
Important Information Regarding M & F
Worldwide and its Directors and Executive Officers
Information Regarding M & F Worldwide
.
For information regarding Parent, Merger Sub and Holdings see
Important Information Regarding the Holdings Filing
Persons and their Directors and Executive
OfficersParent
,
Important Information
Regarding the Holdings Filing Persons and their Directors and
Executive OfficersMerger Sub
and
Important Information Regarding the Holdings Filing
Persons and their Directors and Executive
OfficersHoldings
.
Effective
Time; Structure; Effects
The effective time of the merger will occur at the time that we
duly file the certificate of merger with the Secretary of State
of the State of Delaware on the closing date of the merger (or
such later time as the parties may agree in writing and as
provided in the certificate of merger). The closing will occur
no later than the third business day after satisfaction or
waiver of the conditions to the merger set forth in the Merger
Agreement (other than those conditions that by their nature are
to be satisfied by actions taken at the closing but subject to
the satisfaction or waiver of those conditions) (or such other
date as the parties may agree), as described below in
Conditions to the Merger
.
At the effective time of the merger, Merger Sub will merge with
and into the Company. The Company will survive the merger as a
wholly owned subsidiary of Parent and the Holdings Investors
(and we sometimes refer to the Company as the surviving
corporation). Following completion of the merger, the
common stock will cease to be quoted on NYSE, will be
deregistered under the Exchange Act, and no longer will be
publicly traded. The Company will be a privately held
corporation and the Companys current stockholders, other
than the Holdings Investors, will cease to have any ownership
interest in the Company or rights as Company stockholders.
Therefore, such current stockholders of the Company, other than
the Holdings Investors, will not participate in any future
earnings or growth of the Company and will not benefit from any
appreciation in value of the Company.
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Guarantee
The Merger Agreement contains a guarantee by Holdings of the
performance of the obligations of Parent and Merger Sub under
the Merger Agreement.
Treatment
of Stock; Deferred Compensation Plan Stock Accounts
Common
Stock
At the effective time of the merger, as a result of the merger
and without any action on the part of Merger Sub or the Company
or the holder of any capital stock of Merger Sub or the Company,
each share of common stock issued and outstanding immediately
prior to the effective time of the merger (other than excluded
shares) will be converted into the right to receive $25.00 in
cash, without interest, less any required withholding taxes. At
the effective time of the merger, each excluded share will be
automatically canceled and cease to exist.
Preferred
Stock
At the effective time of the merger, as a result of the merger
and without any action on the part of Merger Sub or the Company
or the holder of any capital stock of Merger Sub or the Company,
each share of our series A preferred stock, par value $0.01
per share, all of which are held by the Company, will be
automatically canceled and cease to exist.
Deferred
Compensation Plan Stock Accounts
At the effective time of the merger, each notional stock account
with respect to common stock under our Outside Directors
Deferred Compensation Plan will be adjusted pursuant to the
terms of the plan such that the account ceases to represent a
notional investment in shares of common stock and will be
converted into a notional cash account equal to the product of
(x) the number of shares of common stock subject to such
stock account multiplied by (y) $25.00.
Dissenters
Rights of Appraisal
Shares of common stock that are held by a stockholder who has
perfected a demand for appraisal rights pursuant to
Section 262 of the DGCL will not be converted into the
right to receive the merger consideration unless and until the
dissenting holder effectively withdraws his or her request for
or loses his or her right to appraisal under the DGCL. Each such
dissenting stockholder will be entitled to receive only the
payment provided by Section 262 of the DGCL with respect to
shares owned by such dissenting stockholder. See
Special FactorsDissenters Rights to
Appraisal
for a description of the procedures that you
must follow if you desire to exercise your appraisal rights
under Delaware law.
Exchange
and Payment Procedures
Promptly after the effective time of the merger, Parent will
deposit, or cause to be deposited, with a bank or trust company,
referred to herein as the paying agent, chosen by
Parent and reasonably acceptable to us, cash in the amount
necessary to pay the merger consideration to each holder of
shares of common stock. As promptly as practicable after the
effective time of the merger, the surviving corporation will
instruct the paying agent to mail a letter of transmittal to the
holders of record of shares of common stock. The letter of
transmittal will tell you how to surrender your
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common stock certificates or shares you may hold that are
represented by book entry in exchange for the merger
consideration.
You should not return your stock certificates or evidence of
book-entry shares with the enclosed proxy card, and you should
not forward your stock certificates or evidence of book-entry
shares to the paying agent without a properly completed letter
of transmittal.
You will not be entitled to receive the merger consideration
until you surrender your stock certificates (or effective
affidavit of loss in lieu thereof) or evidence of book-entry
shares to the paying agent, together with a properly completed
and duly executed letter of transmittal and any other documents
as may be reasonably requested by the paying agent. If a
transfer of ownership of shares is not registered in the
transfer records of the Company, cash to be paid upon due
surrender of the stock certificate or evidence of book-entry
shares may be paid to the transferee if the stock certificate
formerly representing the shares is presented to the paying
agent accompanied by all documents required to evidence and
effect the transfer and to evidence that any applicable stock
transfer taxes have been paid or are not applicable.
No interest will be paid or accrued on the amount payable upon
the due surrender of certificates (or effective affidavit in
lieu thereof as provided below) or evidence of book-entry
shares. The surviving corporation and paying agent will be
entitled to deduct, withhold, and pay to the appropriate taxing
authorities, any applicable taxes from the merger consideration.
Any sum that is withheld and paid to a taxing authority by the
paying agent will be deemed to have been paid to the person with
regard to whom it is withheld.
After the effective time of the merger, there will be no
transfers on our stock transfer books of shares of common stock
that were outstanding immediately prior to the effective time of
the merger. If, after the effective time of the merger,
certificates or evidence of book-entry shares are presented to
the paying agent, they will be cancelled and exchanged for the
merger consideration.
Any portion of the merger consideration deposited with the
paying agent that remains undistributed to holders of common
stock six months after the effective time of the merger will be
delivered, upon demand, to the surviving corporation. Former
holders of common stock who have not complied with the
above-described exchange and payment procedures may thereafter
only look to the surviving corporation for payment of the merger
consideration. No party to the Merger Agreement will be liable
to any former holder of common stock for any cash delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
If any certificate formerly representing shares of common stock
is lost, stolen or destroyed, the paying agent will issue the
merger consideration deliverable in respect of, and in exchange
for, such lost, stolen or destroyed certificate only upon:
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the making of an affidavit of such loss, theft or destruction by
the person claiming such certificate to be lost, stolen or
destroyed; and
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if required by the surviving corporation, the posting by such
person of a bond in such reasonable amount as the surviving
corporation may reasonably require as indemnity against any
claim that may be made against it with respect to such
certificate; or
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if required by the surviving corporation, the entering into an
indemnity agreement by such person reasonably satisfactory to
the surviving corporation to indemnify the surviving corporation
against any claim that may be made against it with respect to
such certificate.
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These procedures will be described in the letter of transmittal
that you will receive, which you should read carefully in its
entirety.
Dual
Employee
The Merger Agreement provides that the Company will not be in
breach of the Merger Agreement or liable in respect of any
actions taken by any dual employee, defined as any
director of or person employed by Holdings, Parent, Merger Sub
or any of their respective affiliates who also is a director or
employee of or provides services to the Company or any Company
subsidiary.
In addition, the Companys representations and warranties
are qualified by the knowledge of any dual employee
as of the date of the Merger Agreement, and Parent will not have
any right to terminate the Merger Agreement or claim any damage
or seek any other remedy at law or in equity for any breach of
or inaccuracy in any representation or warranty made by the
Company to the extent any dual employee had
knowledge as of the date of the Merger Agreement of
any facts or circumstances that constitute or give rise to such
breach. Knowledge for such purposes assumes that the
dual employee had made a reasonable inquiry.
Representations
and Warranties
The Merger Agreement contains representations and warranties
made by the Company to Parent and Merger Sub, and
representations and warranties made by Parent and Merger Sub to
the Company, and may be subject to important limitations and
qualifications agreed to by the parties in connection with
negotiating the terms of the Merger Agreement. In particular,
the representations that we made are qualified by certain
information that we filed with the SEC on or after
January 1, 2009, and at least two business days prior to
the date of the Merger Agreement, as well as by a disclosure
letter that we delivered to Parent and Merger Sub concurrently
with the signing of the Merger Agreement. In addition, certain
representations and warranties were made as of a specified date,
may be subject to contractual standards of materiality different
from those generally applicable to public disclosures to
stockholders, or may have been used for the purpose of
allocating risk among the parties rather than establishing
matters of fact. For the foregoing reasons, you should not rely
on the representations and warranties contained in the Merger
Agreement as statements of factual information. Our
representations and warranties relate to, among other things:
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our and our significant subsidiaries due organization,
valid existence, good standing and qualification to do business;
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our capitalization;
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our subsidiaries and our equity interests in them;
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our corporate power and authority to enter into the Merger
Agreement and, subject to the approval of the Merger Agreement
by the required vote of our stockholders, to consummate the
transactions contemplated by the Merger Agreement;
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enforceability of the Merger Agreement against the Company;
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that our board of directors (upon the recommendation of the
special committee) has approved the terms of the Merger
Agreement and the merger, determined that the merger is
advisable, fair to and in the best interest of the
Companys stockholders other than Holdings and its
affiliates and resolved to recommend that our stockholders vote
for the approval of the Merger Agreement and the merger;
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the receipt by the special committee of a fairness opinion from
Evercore;
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the absence of violations of, or conflicts with, our governing
documents, applicable law or certain agreements as a result of
entering into the Merger Agreement and consummating the merger
and the other transactions contemplated by the Merger Agreement;
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the required consents and approvals of governmental entities in
connection with the merger and the other transactions
contemplated by the Merger Agreement;
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absence of undisclosed brokers fees;
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accuracy and compliance with applicable securities laws of the
information supplied by the Company for inclusion in this proxy
statement and other filings made with the SEC in connection with
the merger and the other transactions contemplated by the Merger
Agreement;
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the timeliness and compliance with applicable legal requirements
of our SEC filings since January 1, 2009, including the
accuracy and compliance with applicable legal requirements of
the financial statements contained therein;
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the adequacy of our disclosure controls and procedures;
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the absence of certain changes since December 31, 2010;
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the absence of a material adverse effect from
December 31, 2010, through the date of the Merger Agreement;
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the absence of undisclosed liabilities;
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legal proceedings and governmental orders;
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intellectual property;
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material contracts and the Companys performance of its
obligations thereunder; and
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the inapplicability of anti-takeover statutes to the merger and
the other transactions contemplated by the Merger Agreement.
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Many of our representations and warranties are qualified by a
material adverse effect standard. For the purposes
of the Merger Agreement, material adverse effect
means any change, development or event that, individually or in
the aggregate, has had or would reasonably be expected
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to have a material adverse effect on the operations, business,
properties, liabilities or condition (financial or otherwise) of
the Company and its subsidiaries taken as a whole.
A material adverse effect will not be deemed to have
occurred as a result of any such effect relating to or resulting
from:
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changes in the economy or financial markets generally in the
United States or other countries in which the Company conducts
material operations;
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the occurrence, escalation, outbreak or worsening of any war,
acts of terrorism or military conflicts in the United States or
other countries in which the Company conducts material
operations;
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changes generally affecting the industries in which the Company
and its Subsidiaries operate;
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changes in any applicable laws or U.S. generally accepted
accounting principles, referred to herein as GAAP,
or principles, interpretations or enforcement thereof;
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the existence, occurrence or continuation of any force majeure
events, including any earthquakes, floods, hurricanes, tropical
storms, fires or other natural disasters;
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any failure by the Company to meet any published analyst
estimates or expectations of the Companys revenue,
earnings or other financial performance or results of operations
for any period, in and of itself, or any failure by the Company
to meet its internal or published projections, budgets, plans or
forecasts of its revenues, earnings, or other financial
performance or results of operations, in and of itself (provided
that the facts or occurrences giving rise to or contributing to
such failure to the extent not otherwise excluded from the
definition of material adverse effect may be taken
into account in determining whether there has been a material
adverse effect);
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the announcement of the execution of the Merger Agreement and
the transactions contemplated hereby, including the initiation
or continuation of litigation by any person with respect to or
related to the subject matter of this Agreement, and including
any termination of, reduction in or similar negative impact on
relationships, contractual or otherwise (including loan
agreements or any other financing sources), with any customers,
suppliers, lenders, distributors, partners or employees of the
Company and its subsidiaries, or the identity of the parties to
this Agreement;
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any action taken or not taken by the Company or any of its
subsidiaries, in each case which is required by this Agreement
(provided that this clause shall not apply with respect to any
action taken pursuant to the requirement that the Company and
its subsidiaries conduct their business in all material respects
in the ordinary course of business consistent with past
practice); or
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any actions taken or not taken at the request of Parent.
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However, effects resulting from any change, event, circumstance
or development enumerated in the first five bullets above that
has had or would reasonably be expected to have a
disproportionate adverse effect on the Company or any of its
subsidiaries compared to other companies operating
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in the industries in which the Company or its subsidiaries
operate will be considered for purposes of determining whether a
material adverse effect has occurred or is reasonably likely to
occur.
The Merger Agreement also contains various representations and
warranties made by Merger Sub and Parent that are subject, in
some cases, to important limitations and qualifications. The
representations and warranties relate to, among other things:
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their organization, valid existence and good standing;
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their corporate or other power and authority to enter into the
Merger Agreement and to consummate the transactions contemplated
by the Merger Agreement;
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enforceability of the Merger Agreement against the Parent and
Merger Sub;
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the absence of violations of, or conflicts with, governing
documents, applicable law or certain agreements as a result of
entering into the Merger Agreement and consummating the merger
and the other transactions contemplated by the Merger Agreement;
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the required consents and approvals of governmental entities in
connection with the merger and the other transactions
contemplated by the Merger Agreement;
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that Merger Sub will have access to sufficient funds to finance
the merger and other amounts payable pursuant to the Merger
Agreement, including all fees and expenses incurred in
connection with the transactions contemplated thereby;
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absence of undisclosed brokers fees;
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accuracy and compliance with applicable securities laws of the
information supplied by Parent, Merger Sub, Holdings or their
affiliates for inclusion in this proxy statement and other
filings made with the SEC in connection with the merger and the
other transactions contemplated by the Merger Agreement;
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solvency of Parent, the surviving corporation and each of its
subsidiaries immediately following the effective time and after
giving effect to the Merger and taking into account the
financing and related transaction costs necessary to consummate
the Merger; and
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ownership of common stock by the Holdings Investors and Merger
Sub.
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The representations and warranties of each of the parties to the
Merger Agreement will expire upon the effective time of the
merger.
Conduct
of Our Business Pending the Merger
Under the Merger Agreement, subject to certain exceptions,
between September 12, 2011, and the effective time of the
merger, we and our subsidiaries are required to:
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conduct operations in all material respects in the ordinary
course of business consistent with past practice; and
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use our reasonable best efforts to preserve our business
organizations intact and maintain existing relations and
goodwill with governmental entities, customers, suppliers,
licensors, licensees, distributors, creditors, lessors,
employees and business associates and keep available the
services of our present employees and agents.
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During the same time period, other than with respect to actions
taken by or at the direction of any dual employee, and subject
to certain exceptions or unless Parent gives its prior written
consent (which consent will not be unreasonably withheld or
delayed), the Company is required not to, and to cause each of
its subsidiaries not to:
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(i) adjust, split, combine or reclassify any of its capital
stock or other equity interests or (ii) set any record
dates or payment dates for the payment of any dividends or
distributions on its capital stocks, or make, declare, set aside
or pay any dividends on or make any other distribution in
respect of any of its capital stock, other than, in each case,
any such dividends or distributions from any subsidiary to the
Company or any other subsidiary;
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issue, deliver, pledge, encumber, sell or purchase any shares of
its capital stock or other equity interests, or rights, warrants
or options to acquire, any such shares of capital stock or other
equity interests, or propose to do any of the foregoing;
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amend its organizational documents;
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merge or consolidate with any other person, or acquire any
assets or capital stock of any other person, other than
acquisitions of assets in the ordinary course of business
consistent with past practice;
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(i) incur any long-term indebtedness for money borrowed or
guarantee any such indebtedness of another person in excess of
$5,000,000, other than in the ordinary course of business, or
(ii) make, or commit to make, any individual capital
expenditures in excess of $2,500,000, other than in the ordinary
course of business;
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except as may be required by changes in applicable law or GAAP,
change any method, practice or principle of accounting;
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enter into any new employment agreements or increase the
compensation of, any officer or director of the Company or any
subsidiary, other than as required by law or by written
agreements in effect on or prior to the date of the Merger
Agreement, or otherwise amend in any material respect any
existing agreements with any such person or amend any benefit
plan or accelerate the vesting or any payment under any benefit
plan, other than in the ordinary course of business;
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settle or otherwise compromise any material litigation,
arbitration or other judicial or administrative dispute or
proceeding relating to (i) the Company or its subsidiaries,
other than in the ordinary course of business or (ii) the
merger or the transactions contemplated by the Merger Agreement;
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sell, transfer, lease, mortgage, encumber or otherwise dispose
of any of its material properties or assets to any person,
except (i) in the ordinary course of business
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consistent with past practice, (ii) pursuant to an
agreement in effect on September 12, 2011, or
(iii) dispositions of obsolete assets;
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make an investment in, or loan to, any person, except the
Company or its subsidiaries, other than in the ordinary course
of business;
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enter into, terminate or amend any material contract other than
in the ordinary course of business;
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except in the ordinary course of business, make or change any
material election concerning taxes or tax returns, file any
material amended tax return, enter into any material closing
agreement with respect to taxes, settle any material tax claim
or assessment or surrender any right to claim a material refund
of taxes or obtain any tax ruling; or
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agree or commit to do any of the foregoing.
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Stockholders
Meeting
The Merger Agreement requires us, as promptly as practicable, to
call and hold a special meeting of our stockholders for the
purpose of obtaining the vote of our stockholders necessary to
approve the Merger Agreement. Except in certain circumstances
described below in
No Solicitation of
Transactions
, we are required to use our reasonable
best efforts to take all action necessary to satisfy the
condition regarding the approval of the Merger Agreement by our
stockholders described below in
Conditions to the
Merger
. Holdings is required to vote shares
beneficially owned by it in favor of the Merger Agreement.
No
Solicitation of Transactions
Pursuant to the Merger Agreement, neither the Company nor its
officers, directors and representatives will:
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initiate, solicit, or knowingly encourage, induce or assist any
inquiries or the making, submission or announcement of any
proposal or offer that constitutes, or could reasonably be
expected to lead to, any acquisition proposal;
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execute or enter into any contract with respect to an
acquisition proposal (other than an acceptable confidentiality
agreement as provided below);
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engage in, continue or otherwise participate in any discussions
or negotiations regarding, or provide or furnish any non-public
information or data relating to the Company or any of our
subsidiaries or afford access to the business, properties,
assets, books, records or personnel of the Company or any of our
subsidiaries to any person (other than Parent, Merger Sub, or
any of their respective affiliates, designees or
representatives) with the intent to initiate, solicit,
encourage, induce or assist the making, submission or
commencement of, any proposal or offer that constitutes, or
could reasonably be expected to lead to, any acquisition
proposal; or
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otherwise knowingly facilitate any effort or attempt to make an
acquisition proposal.
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An acquisition proposal is defined in the Merger
Agreement to mean any proposal or offer relating to:
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a merger, consolidation, share exchange or business combination
involving the Company or any of its subsidiaries representing
10% or more of the assets of the Company and its subsidiaries,
taken as a whole;
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a sale, lease, exchange, mortgage, transfer or other
disposition, in a single transaction or series of related
transactions, of 10% or more of the assets of the Company and
its subsidiaries, taken as a whole;
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a purchase or sale of shares of capital stock or other
securities, in a single transaction or series of related
transactions, representing 10% or more of the voting power of
the capital stock of the Company, including by way of a tender
offer or exchange offer; or
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any other transaction having a similar effect to the foregoing.
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If we receive an unsolicited acquisition proposal, any request
for non-public information, or any inquiry or request for
discussions or negotiations relating to an acquisition proposal,
we are required to notify Parent promptly (and in any event
within 24 hours) of the identity of the person making the
acquisition proposal and a description of the proposals
material terms and conditions. We are also required to keep
Parent informed on a current basis of the status of any
acquisition proposal.
We may, prior to the approval of the Merger Agreement by our
stockholders at the special meeting, in response to a
bona
fide
written acquisition proposal, participate in
discussions regarding such acquisition proposal solely to
clarify the terms of such acquisition proposal and if our board
of directors has determined in good faith that the acquisition
proposal is or could reasonably be expected to result in a
superior proposal (as defined below) and, after
consultation with outside legal counsel, that failure to take
such action would be inconsistent with the fiduciary obligations
of our board of directors under applicable laws, we may:
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furnish access and non-public information relating to the
Company to the person who has made such acquisition proposal; and
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participate in discussions and negotiations regarding such
acquisition proposal.
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We may not (i) withdraw, modify or amend the board of
directors recommendation in any manner adverse to Parent,
(ii) approve, endorse or recommend an acquisition proposal
or, (iii) at any time following receipt of an acquisition
proposal, fail to reaffirm its approval or recommendation of the
Merger Agreement and merger as promptly as practicable (but in
any event within five business days after receipt of any
reasonable written request to do so from Parent), each of the
foregoing referred to herein as an Adverse Company
Recommendation.
Our board of directors may, however, at any time before
obtaining the approval of the Merger Agreement by our
stockholders, to the extent it determines in good faith, after
consultation with outside legal counsel, that failure to take
such action would be inconsistent with its fiduciary duties,
90
in response to (i) a superior proposal received by our
board of directors after the date of the Merger Agreement or
(ii) an intervening event, make an Adverse
Company Recommendation, but only if:
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we first provide Parent prior written notice, at least three
business days in advance, that we intend to make such Adverse
Company Recommendation, and, in the case of a superior proposal,
are prepared to terminate the Merger Agreement to enter into a
contract with respect to a superior proposal (in the case of a
superior proposal, the notice shall include the material terms
and conditions of the transaction that constitutes such superior
proposal, the identity of the party making the superior
proposal, and copies of any contracts that are proposed to be
entered into); and
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during the three business days after the receipt of such notice
(it being understood and agreed that in the case of a superior
proposal, any material change to the financial or other terms
and conditions of such superior proposal shall require an
additional notice to Parent of a two business day period which
may, in whole or in part, run concurrently with the initial
three business day period), we have negotiated with Parent in
good faith (to the extent Parent desires to negotiate) to make
such adjustments in the terms and conditions of the Merger
Agreement so that there is no longer a basis to make such
Adverse Company Recommendation.
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A superior proposal means an unsolicited
bona
fide
acquisition proposal (except that references to 10% in
the definition of such term are deemed to be references to 50%)
made in writing and not solicited in violation of the above
prohibitions that our board of directors has determined in its
good faith judgment (i) is reasonably likely to be
consummated in accordance with its terms, taking into account
all legal, financial and regulatory aspects of the proposal and
the person making the proposal (including any conditions
relating to financing, regulatory approvals or other events or
circumstances beyond the control of the party invoking the
condition), and (ii) if consummated, would result in a
transaction more favorable to stockholders other than Holdings
and its affiliates from a financial point of view (including the
effect of any termination fee or provision relating to the
reimbursement of expenses) than the transaction contemplated by
the Merger Agreement (after taking into account any revisions
proposed by Parent to the terms of the transaction and the time
likely to be required to consummate such acquisition proposal).
An intervening event means a material event, change,
development, effect, occurrence or state of facts (other than
with respect to the receipt of any acquisition proposal) that
was not known or reasonably foreseeable to our board of
directors or the special committee on the date of the Merger
Agreement, and becomes known to the our board of directors or
the special committee before the approval of the Merger
Agreement by our stockholders.
Agreement
to Take Further Action and to Use Reasonable Best
Efforts
Each of the parties to the Merger Agreement is required to use
its reasonable best efforts to take all actions necessary,
proper or advisable to ensure that the conditions to the merger
are satisfied and that the merger is consummated as promptly as
practicable. In particular, the parties are required to use
reasonable best efforts to obtain necessary governmental
consents and approvals and make necessary filings, including
filings under the
Hart-Scott-Rodino
Act and appropriate filings under other applicable antitrust or
related laws. We are also required to cooperate to obtain
necessary or advisable consents, approvals or waivers from third
parties and to defend and contest any lawsuits or other legal
proceedings, whether judicial or administrative, challenging the
Merger
91
Agreement or the consummation of the transactions contemplated
by the Merger Agreement, including seeking to have any stay or
temporary restraining order entered by any governmental
authority vacated or reversed.
Notwithstanding the foregoing, no party is required to (and the
Company cannot without Parents consent) commit to any
material divestiture transaction or agree to any restriction on
its business, or agree to hold separate any part of its or their
businesses.
Financing
Cooperation
We are required to cooperate with Parent, at Parents cost
and expense, in connection with Parents efforts to obtain
any financing in connection with consummation of the merger
(provided that the requested cooperation is consistent with
applicable law and does not unreasonably interfere with the
operations of the Company and its subsidiaries), including by
participating in presentations, meetings or diligence sessions
with prospective lenders and assisting with the preparation of
financial statements and other materials requested by
prospective lenders. Parent will indemnify the Company, its
subsidiaries and their respective representatives from and
against any and all losses suffered or incurred by them in
connection with any action taken by them at the request of
Parent in connection with the requested cooperation or any
information utilized in connection with the requested
cooperation (other than information provided by the Company or
its subsidiaries).
Other
Covenants and Agreements
The Merger Agreement contains additional agreements among the
Company, Parent and Merger Sub relating to, among other things:
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giving Merger Sub access to our officers, personnel, offices,
properties, books, records and documents;
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notices of certain events;
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the filing of this proxy statement and the required
Schedule 13E-3
with the SEC, and cooperation in preparing this proxy statement
and the
Schedule 13E-3
and in responding to any comments received from the SEC on those
documents;
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indemnification and insurance of directors and officers,
including maintaining directors and officers
liability insurance for six years following the effective time
of the merger (or obtaining tail insurance policies
with a claims period of at least six years following the
effective time of the merger), provided that the surviving
corporation is not required to pay an annual premium in excess
of 300% of the last annual premium paid by the Company for such
insurance before September 12, 2011;
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coordination of press releases and other public statements
about the merger and the Merger Agreement;
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actions necessary to exempt dispositions of equity securities by
our directors and officers pursuant to the merger under
Rule 16b-3
under the Exchange Act; and
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reasonable opportunity to participate in the defense of any
stockholder litigation against any party or its respective
directors and officers, as applicable, relating to the Merger
Agreement and the related transactions.
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Conditions
to the Merger
Each partys obligation to complete the merger is subject
to the satisfaction of the following conditions, none of which
may be waived:
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Stockholder Approval.
The Merger Agreement must have
been approved by the affirmative vote of holders of a majority
of the (i) outstanding shares of common stock and
(ii) outstanding shares of common stock excluding shares
owned by Holdings and its affiliates.
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Regulatory Approvals.
The waiting period under the
Hart-Scott-Rodino
Act must have expired or been terminated.
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No Injunctions or Restraints.
No law or order shall
have been enacted, issued or entered by a governmental entity
that restrains, enjoins or otherwise prohibits consummation of
the merger or the other transactions contemplated by the Merger
Agreement.
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Our obligation to complete the merger is subject to satisfaction
or waiver of the following additional conditions, any of which
may be waived:
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Representations and Warranties.
The representations
and warranties of Parent and Merger Sub in the Merger Agreement
must be true and correct in all respects both when made and as
of the closing date of the merger, without regard to any
materiality qualifications contained in them, as
though made on and as of such date (except for representations
and warranties made as of a specified date, the accuracy of
which is determined as of that specified date), except where the
failure of any such representation or warranty to be so true and
correct would not reasonably be expected to prevent or
materially delay the consummation of the transactions
contemplated by the Merger Agreement.
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Performance of Covenants.
Parent and Merger Sub must
have performed in all material respects all obligations that
they are required to perform under the Merger Agreement prior to
the closing date of the merger.
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Officers Certificate.
Each of Parent and
Merger Sub must deliver to us at closing an officers
certificate with respect to the satisfaction of the conditions
relating to Merger Subs and Parents representations,
warranties, covenants and agreements.
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The obligations of Parent and Merger Sub to complete the merger
are subject to the satisfaction or waiver of the following
additional conditions, any of which may be waived:
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Representations and Warranties.
Our representation
and warranty regarding the absence of a material adverse
effect from December 31, 2010 through the date of the
Merger Agreement must be true and correct in all respects both
when made and as of the closing date of the merger, without
regard to any materiality qualifications
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contained in them. All of our other representations and
warranties must be true and correct in all respects as of the
date of the Merger Agreement and as of the closing of the
merger, without regard to any materiality or
material adverse effect qualifications contained in
them, as though made on and as of such date (except for
representations and warranties made as of a specified date, the
accuracy of which is determined as of that specified date),
except where the failure of any such representation or warranty
to be so true and correct would not individually or in the
aggregate have a material adverse effect or reasonably be
expected to prevent or materially delay the consummation of the
transactions contemplated by the Merger Agreement.
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Performance of Covenants
. The Company must have
performed in all material respects all obligations that it is
required to perform under the Merger Agreement prior to the
closing date of the merger.
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Officers Certificate
. We must deliver to
Parent and Merger Sub at closing an officers certificate
with respect to the satisfaction of the conditions relating to
our representations, warranties, covenants and agreements.
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Absence of Material Adverse Effect
. From the date of
the Merger Agreement, there shall not have occurred any
material adverse effect on the Company.
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Termination
The Company and Parent may terminate the Merger Agreement by
mutual written consent at any time before the completion of the
merger. In addition, either the Company or Parent may terminate
the Merger Agreement if:
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the merger has not been completed by March 31, 2012, except
that this right will not be available to any party whose failure
to fulfill any obligation under the Merger Agreement has been a
principal cause of, or resulted in, the failure to timely
complete the merger;
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the Merger Agreement has been submitted to our stockholders for
approval and the required vote has not been obtained, provided
that Parent does not have the right to terminate pursuant to
this clause if the failure to obtain the required vote is due to
the failure of Holdings to vote the shares of common stock
beneficially owned by it; or
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any final nonappealable injunction, order, decree, judgment or
ruling permanently enjoins or otherwise prohibits the merger.
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Parent may terminate the Merger Agreement if:
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prior to stockholder approval of the Merger Agreement, our board
of directors effects an Adverse Company Recommendation; or
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there is a breach of any representation, warranty, covenant or
agreement on the part of the Company such that (if such breach
occurred or was continuing as of the closing date) the
conditions relating to the Companys representations,
warranties, covenants and agreements would be incapable of
fulfillment and which breach is incapable of
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being cured, or is not cured, within 15 days following
receipt of written notice of such breach.
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The Company may terminate the Merger Agreement if:
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prior to stockholder approval of the Merger Agreement, in
response to a superior proposal or intervening event, our board
of directors effects an Adverse Company Recommendation in
compliance with the terms and conditions specified in the Merger
Agreement; or
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at any time before the completion of the merger, there is a
breach of any representation, warranty, covenant or agreement on
the part of Parent or Merger Sub such that (if such breach
occurred or was continuing as of the closing date) the
conditions relating to the Parents and Merger Subs
representations, warranties, covenants and agreements would be
incapable of fulfillment and which breach is incapable of being
cured, or is not cured, within 15 days following receipt of
written notice of such breach.
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Estimated
Fees and Expenses
The estimated fees and expenses incurred or expected to be
incurred by the Company in connection with the merger are as
follows:
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Description
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Amount
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Financial advisory fee
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$2,900,000.00
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Legal fees and expenses
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$1,500,000.00
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Proxy solicitation fees
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$50,000.00
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SEC filing fees
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$31,735.15
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Printing and mailing costs
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$100,000.00
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Accounting fees
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$50,000.00
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Total
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$4,631,735.15
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In addition, it is expected that Merger Sub
and/or
Parent will incur approximately $60,000.00 in paying agent fees.
It is also expected that Merger Sub
and/or
Parent will incur approximately $9,575,000.00 of financing
costs, legal fees and other advisory fees.
Except as provided below in
The Merger
AgreementTermination Fees; Reimbursement of
Expenses
, the Merger Agreement provides that each of
Parent, Merger Sub and the Company will pay all costs and
expenses incurred by it in connection with the Merger Agreement.
Termination
Fees; Reimbursement of Expenses
The Company is required to pay a termination fee of $8,250,000
to Parent:
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if we terminate the Merger Agreement as provided above as a
result of an Adverse Company Recommendation made in connection
with the receipt of a superior proposal; or
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if Parent terminates the Merger Agreement as a result of an
Adverse Company Recommendation made in connection with the
receipt or announcement of an acquisition proposal.
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The Company is required to pay all of Parents, Merger
Subs and their respective affiliates reasonable
out-of-pocket
fees and expenses (including reasonable legal fees and expenses)
actually incurred on or prior to the termination, not to exceed
$4,000,000:
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if we terminate or if Parent terminates the Merger Agreement
because the required vote of our stockholders has not been
obtained and, prior to our stockholders vote, an
acquisition proposal was made or publicly announced and such
acquisition proposal was not publicly withdrawn without
qualification at least five business days prior to our
stockholder vote;
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if Parent terminates upon an Adverse Company Recommendation,
under circumstances in which the $8,250,000 termination fee
described above is not payable; or
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if we terminate the Merger Agreement as provided above because
of an Adverse Company Recommendation made in connection with an
intervening event.
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In addition, if the Company fails to promptly pay the
termination fee or reimburse such
out-of-pocket
fees and expenses, and, in order to obtain such payment, Parent
or Merger Sub commences a suit that results in a judgment
against the Company for such payment, the Company is obligated
to pay Parents or Merger Subs costs and expenses
(including legal fees) incurred in connection with any such suit.
Amendment
The Merger Agreement may be amended by a written agreement
signed by the Company, Merger Sub and Parent at any time prior
to the completion of the merger, whether or not our stockholders
have approved the Merger Agreement. However, no amendment that
requires further approval of our stockholders will be made
without obtaining that approval. No amendment or waiver of any
provision of the Merger Agreement may be made on behalf of the
Company without first obtaining the approval of the special
committee.
Company
Actions
No decision or determination shall be made, or action taken, by
the Company with respect to the Merger Agreement without first
obtaining the approval of the special committee.
Provisions
for Unaffiliated Stockholders
No provision has been made (i) to grant the Companys
unaffiliated stockholders access to the corporate files of
M & F Worldwide, any other party to the merger or any
of their respective affiliates, or (ii) to obtain counsel
or appraisal services at the expense of the Company, any other
such party or affiliate.
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IMPORTANT
INFORMATION REGARDING M & F WORLDWIDE AND ITS
DIRECTORS AND EXECUTIVE OFFICERS
Information
Regarding M & F Worldwide
M & F Worldwide is a holding company that operates
through four business segments: Harland Clarke, Harland
Financial Solutions, Scantron and Mafco Worldwide. Harland
Clarke is a provider of checks and related products, direct
marketing services and customized business and home office
products. Harland Financial Solutions provides technology
products and related services to financial institutions.
Scantron is a provider of data management solutions and related
services to educational, healthcare, commercial and governmental
entities worldwide including testing and assessment solutions,
patient information collection and tracking, and survey
services. Mafco Worldwide produces licorice products for sale to
the tobacco, food, pharmaceutical and confectionery industries.
M & F Worldwide principal offices are located at 35
East 62nd Street, New York, NY 10065 (telephone:
212-572-8600).
If the Merger Agreement and the merger are approved by the
M & F Worldwide stockholders at the special meeting
and the merger is completed as contemplated, M & F
Worldwide will survive the merger and will continue its
operations as a private company and an indirect wholly owned
subsidiary of Holdings.
During the last five years, M & F Worldwide has not
been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) 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.
Information
Regarding the Directors and Executive Officers of M &
F Worldwide
Our board of directors presently consists of 13 members. The
following persons are the executive officers and directors of
M & F Worldwide as of the date of this proxy
statement. Each executive officer will serve until a successor
is elected by the board of directors or until the earlier of his
or her resignation or removal. None of these persons has been
convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors), and none
of these persons has been a party to any judicial or
administrative proceeding during the past five years 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 of the
directors and executive officers of M & F Worldwide
are citizens of the United States and can be reached
c/o M &
F Worldwide Corp., 35 East 62nd Street, New York, NY 10065.
Ronald O. Perelman
has been a director of the Company
since 1995 and its Chairman since 2007. Mr. Perelman has
been Chairman of the Board and Chief Executive Officer of
Holdings and various affiliates since 1980. Mr. Perelman is
also Chairman of the Board of Revlon Consumer Products
Corporation (Revlon Products) and Revlon, Inc.
(Revlon), each a manufacturer and seller of
cosmetics and personal care products. Mr. Perelman has been
Chairman of the Board of Revlon Products and Revlon since 1998
and 1992, respectively. Each of Revlons and Revlon
Products principal business address is 237 Park Avenue,
New York, NY 10017. Mr. Perelman has
97
also been a director of Scientific Games Corporation
(Scientific Games), a leading integrated supplier of
instant lottery tickets, online lottery systems and terminals,
since 2003. The principal business address of Scientific Games
is 750 Lexington Avenue #25, New York, NY
10022-9813.
Mr. Perelman also previously served as a member of the
board of managers of Allied Security Holdings LLC
(Allied), a security services firm, and REV Holdings
LLC (REV), a manufacturer and seller of cosmetics
and personal care products. Mr. Perelman began his
affiliations with Allied and REV in 2004 and 2002, respectively.
His respective tenures at Allied and REV ended in 2008 and 2006,
respectively. The principal business address of Allied is 3606
Horizon Dr., King of Prussia, PA 19406 and the principal
business address of REV is 35 East 62nd Street, New York,
NY 10065. He also served on the board of directors of
Panavision Inc. (Panavision), a leading designer and
manufacturer of high-precision camera systems. Mr. Perelman
was on Panavisions board of directors from 1998 to March
2010. The principal business address of Panavision is
6219 De Soto Avenue, Woodland Hills, CA 91367.
Philip E. Beekman
has been a director of the Company
since 2003. Mr. Beekman has also been President of Owl
Hollow Enterprises (Owl), a consulting and
investment company, since prior to 1998. The principal business
address of Owl is 6693 E Pleasant Run Parkway S, Indianapolis,
IN 46219. He also previously served on the board of
directors of Linens N Things Inc. (Linens), a
consumer products merchandiser, from 1997 to 2008. The principal
business address of Linens is 6 Brighton Road, Clifton, NJ
07015.
William C. Bevins
has been a director of the Company
since 2008. Mr. Bevins has been Senior Executive Vice
President of Holdings since December 2010. Mr. Bevins
also served as President and Chief Executive Officer of
Panavision from June 2009 until June 2011.
Mr. Bevins was retired from active business from 2000 to
June 2009.
Martha L. Byorum
has been a director of the Company since
2007. Ms. Byorum has served as Senior Managing Director of
Stephens Cori Capital Advisors (Stephens Cori), a
division of Stephens, Inc., a private investment banking firm,
since January 2005. The principal business address of Stephens
Cori is 65 East 55th Street 22nd Floor, New York, NY
10022. Ms. Byorum has also served as a director of
Northwest Natural Gas Company (NW Natural) since
2004. NW Natural is a distributor of natural gas with its
principal business address at 220 NW Second Avenue Portland, OR
97209.
Charles T. Dawson
has been a director of the Company
since 2007. Mr. Dawson has been President and Chief
Executive Officer of the Companys wholly owned subsidiary
HCHC since 2005 and has been Chief Executive Officer of its
wholly owned subsidiary Harland Clarke Corp. since 2005. The
principal business addresses of each of HCHC and Harland Clark
Corp. is 10931 Laureate Drive San Antonio, Texas 78249.
Mr. Dawson was also President of Clarke American Corp., a
predecessor of HCHC, from April 2005 to May 2007.
Viet D. Dinh
has been a director of the Company since
2007. Mr. Dinh has been a Professor of Law at the
Georgetown University Law Center (Georgetown) since
1996, and
Co-Director
of Asian Law and Policy Studies. The principal business address
of Georgetown is 600 New Jersey Ave. N.W., Washington, D.C.
20001. Mr. Dinh is a principal of Bancroft PLLC, a law and
public policy consulting firm specializing in national security,
regulatory compliance, and law enforcement, which he co-founded
in 2003. The principal business address of Bancroft PLLC is
1919 M Street, N.W., Suite 470,
Washington, D.C. 20036. Since 2010, he has also served as
General Counsel and Corporate Secretary of Strayer Education,
Inc. (Strayer), a provider of various academic
programs
98
through traditional classrooms and the Internet. The principal
business address of Strayer is 2303 Dulles Station Boulevard,
Herndon, VA 20171. He has also served on the board of directors
of News Corporation, a global, vertically integrated media
company, with properties in film, television, cable, magazines,
newspapers, publishing since 2004. The principal business
address of News Corporation is 1211 Avenue of the Americas, New
York, New York, 10036. Mr. Dinh also served on the Board of
Orchard Enterprises, Inc., an independent music and video
distributor specializing in comprehensive digital strategies for
content owners, from 2007 to 2009. The principal business
address of Orchard Enterprises, Inc. is 23 East
4th St #3, New York, NY
10003-7023.
Theo W. Folz
has been a director of the Company since
1996. Mr. Folz was President and Chief Executive Officer of
Consolidated Cigar Corporation and its successor company,
Altadis U.S.A., a manufacturer of cigars, pipe tobacco and
smokers accessories, from 1984 through September 2009. The
principal business address of Altadis U.S.A. is 5900 North
Andrews Avenue, Fort Lauderdale, FL 33309.
General John M. Keane
(ret.) has been a director of the
Company since September 2008. General Keane has been a senior
partner at SCP Partners, a diversified, multi-stage venture
capital firm since 2009. The principal business address of SCP
Partners is 2020 K Street, N.W., Suite 300,
Washington, D.C. 20006. He has been President of GSI, LLC,
a consulting firm, since 2003. The principal business address of
GSI, LLC is 2200 Wilson Boulevard, Ste
102-542.
Arlington, VA 22201. General Keane has also been a member of the
boards of directors of MetLife, Inc., a provider of health
insurance and financial services, since 2003 and General
Dynamics Corporation, a defense industry contractor, since 2004.
The principal business addresses of MetLife, Inc. and General
Dynamics Corporation are 200 Park Avenue, New York, NY 10166 and
2941 Fairview Park Dr., Falls Church, VA 22042, respectively. He
also previously served as a member of the board of managers of
Allied from 2005 to 2008. General Keane has also served as a
director of Cyalume Technologies, Inc (Cyalume), a
leader in the chemiluminescent industry, from 2008 to 2011. The
principal business address of Cyalume is 96 Windsor St, West
Springfield, MA, 01089.
Paul M. Meister
has been a director of the Company since
1995. Mr. Meister is a Founder and Chief Executive Officer
of Liberty Lane Partners, LLC (Liberty), a private
management and investment company. Mr. Meister has worked
at Liberty since 2007. The principal business address of Liberty
is One Liberty Lane E., Hampton, NH 03842. He has also served as
Chairman of inVentiv Health, Inc. (inVentiv) since
2010 and CEO of inVentiv since 2011. InVentiv provides
outsourced services to pharmaceutical, life science and health
care industries. The principal business address of inVentiv is 1
Van de Graaff Drive, Burlington, MA 01803. Mr. Meister was
Chairman of the Board of Thermo Fisher Scientific Inc.
(Thermo), a scientific instruments, equipment and
supplies firm, from November 2006 until his retirement in April
2007. From March 2001 to November 2006, Mr. Meister was
Vice Chairman of Fisher Scientific International, Inc.
(Fisher), a predecessor to Thermo. The principal
business address of Thermo and Fisher is 81 Wyman Street,
Waltham, Massachusetts 02451. Mr. Meister has been a
director of LKQ Corporation (LKQ), a provider of
aftermarket collision replacement products, since 1999. The
principal business address of LKQ is 500 West Madison
Street, Chicago, IL 60661.
Paul G. Savas
has been Executive Vice President and Chief
Financial Officer of the Company since May 2006. He has also
been Executive Vice President and Chief Financial Officer of
Holdings since April 2007 and Executive Vice
PresidentFinance of Holdings and various of its affiliates
since 2006. Prior to these positions he served in various
positions at Holdings and its affiliates, including as Senior
Vice President of Finance from October 2002 until May 2006.
99
Mr. Savas has been a director of HCHC since May 2006. He
has also been a director of SIGA Technologies, Inc.
(SIGA), a drug manufacturer, since January 2004. The
principal business address of SIGA is 35 East 62nd Street,
New York, NY 10065.
Barry F. Schwartz
has been a director of the Company and
President and Chief Executive Officer of the Company since
January 2008. Prior to his appointment as President and Chief
Executive Officer, he served as Executive Vice President of the
Company from 1996 to January 2008, serving as interim President
and Chief Executive Officer from September 2007 through January
2008. In addition, Mr. Schwartz served as General Counsel
of the Company from 1996 to March 2008. Mr. Schwartz has
been Executive Vice Chairman and Chief Administrative Officer of
Holdings and various affiliates since October 2007. He has been
Executive Vice President and General Counsel of Holdings and
various affiliates since 1993. Mr. Schwartz has also been a
director of the following companies: (i) HCHC since 2005;
(ii) Revlon Products since 2004; (iii) Revlon since
November 2007; and (iv) Scientific Games since 2003. He
also previously served as member of the board of managers of
Allied from 2007 to 2008 and REV from 2002 to 2006.
Bruce Slovin
has been a director of the Company since
1995. Mr. Slovin has been the President of 1 Eleven
Associates, LLC (1 Eleven), a private investment
firm, since January 2000. 1 Elevens principal business
address is 111 East 61st Street, New York, NY 10065.
Mr. Slovin has also been a director of Cantel Medical Corp.
(Cantel) since 1986. Cantel is a provider of
infection prevention and control products and services in the
healthcare market, and its principal business address is 150
Clove Road, Little Falls, New Jersey. Mr. Slovin has also
been a director of SIGA since October 2008. He also previously
served on the board of directors of Sentigen Holding Corp.
(Sentigen), a biotechnology company from 2003 to
2006. The principal business address of Sentigen is 445 Marshall
Street, Phillipsburg, NJ 08865.
Stephen G. Taub
has been a director of the Company since
1998. Mr. Taub has served as President and Chief Executive
Officer of the Companys wholly-owned subsidiary, Mafco
Flavors (including its predecessor in interest, Mafco
Worldwide) since 1999. Mafco Flavors principal business
address is Third Street & Jefferson Avenue, Camden, NJ
08104.
Carl B. Webb
has served as a director of the Company
since January 2007. He currently is the Chief Executive Officer
and Board Member of Pacific Capital Bancorp (Pacific
Capital), a bank holding company and is Chairman and Chief
Executive Officer of Pacific Capital Bank, N.A.
(PCB, together with Pacific Capital,
Pacific), a provider of various commercial and
consumer banking services. Mr. Webb has served at Pacific
Capital and PCB since August 2010. The principal business
address of Pacific is
c/o PO Box 60839,
Santa Barbara, CA 93160. Mr. Webb is also the Senior
Partner of Ford Financial Fund, L.P. (Ford), a
Dallas-based private equity firm with a focus on equity
investments in financial services firms nationally.
Mr. Webb started at Ford in June 2008. The principal
business address of Ford is 200 Crescent Court, Suite 1350,
Dallas, TX 75201. In addition, Mr. Webb has served as a
consultant to Hunters Glen/Ford, Ltd.
(Hunters), a private investment partnership, since
November 2002. The principal business address of Hunters is 200
Crescent Court Suite 1350, Dallas, TX 75201. He served as
the Co-Chairman of Triad Financial Holdings LLC
(Triad), a financial services company, from July
2007 to October 2009, until the sale of the company to Santander
Consumer USA Inc. (Santander), and the interim
President and Chief Executive Officer from August 2005 to June
2007. The principal business address of Santander is
P.O. Box 961245, Fort Worth, TX 76161.
Mr. Webb has also acted as a director of Hilltop Holdings,
Inc. (Hilltop), formerly Affordable Residential
Communities, Inc., since 2005. Hilltop is a holding company and
its principal business is 200 Crescent Court, Suite 1330,
Dallas,
100
Texas 75201. Since August 2007, Webb has acted as a director of
AMB Property Corp., a predecessor to Prologis, Inc. Prologis,
Inc. is an owner, operator and developer of industrial real
estate and its principal business address is Pier 1, Bay 1,
San Francisco, CA 94111. Mr. Webb also served as a
director of Plum Creek Timber Company, Inc. (Plum
Creek), a timber company, from October 2003 to July 2007.
The principal business address of Plum Creek is 999 Third
Avenue, Suite 4300, Seattle, WA 98104.
Historical
Selected Financial Information
Set forth below is certain historical selected financial
information relating to M & F Worldwide. The
historical selected financial data as of and for the years ended
December 31, 2010, 2009, 2008, 2007 and 2006 have been
derived from M & F Worldwides historical audited
consolidated financial statements, and the historical selected
financial data of M & F Worldwide as of and for the
nine months ended September 30, 2011 and September 30,
2010 have been derived from M & F Worldwides
historical unaudited interim consolidated financial statements.
This information is only a summary and should be read in
conjunction with our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and Quarterly
Report on
Form 10-Q
for the fiscal quarter ended September 30, 2011, each of
which is incorporated by reference into this proxy statement.
More comprehensive financial information is included in such
reports, including managements discussion and analysis of
financial condition and results of operations, and the following
summary is qualified in its entirety by references to such
reports and all of the financial information and notes contained
therein. For additional information, see
Where You Can
Find Additional Information
. Results of interim
periods are not necessarily indicative of the results expected
for a full year or for future periods.
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
Nine Months Ended
|
|
|
December 31,
|
|
September 30,
|
|
|
2010(a)
|
|
2009(b)
|
|
2008(c)
|
|
2007(d)
|
|
2006
|
|
2011(e)
|
|
2010
|
|
|
(in millions, except per share amounts)
|
|
Statement of Operations Data:
|
Net revenues
|
|
$
|
1,782.6
|
|
$
|
1,814.1
|
|
$
|
1,906.2
|
|
$
|
1,472.8
|
|
$
|
722.0
|
|
$
|
1,309.8
|
|
$
|
1,348.4
|
Cost of revenues
|
|
|
1,028.4
|
|
|
1,055.4
|
|
|
1,128.3
|
|
|
889.3
|
|
|
439.2
|
|
|
771.7
|
|
|
779.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
754.2
|
|
|
758.7
|
|
|
777.9
|
|
|
583.5
|
|
|
282.8
|
|
|
538.1
|
|
|
568.5
|
Selling, general and administrative expenses
|
|
|
414.3
|
|
|
415.6
|
|
|
467.9
|
|
|
357.5
|
|
|
162.0
|
|
|
332.1
|
|
|
309.5
|
Revaluation of contingent consideration
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24.6)
|
|
|
0.2
|
Asset impairment charges
|
|
|
3.7
|
|
|
44.4
|
|
|
2.4
|
|
|
3.1
|
|
|
|
|
|
2.4
|
|
|
2.5
|
Restructuring costs
|
|
|
22.3
|
|
|
32.5
|
|
|
14.6
|
|
|
5.6
|
|
|
3.3
|
|
|
8.3
|
|
|
15.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
313.6
|
|
|
266.2
|
|
|
293.0
|
|
|
217.3
|
|
|
117.5
|
|
|
219.9
|
|
|
241.1
|
Interest expense, net
|
|
|
(116.8)
|
|
|
(137.4)
|
|
|
(186.7)
|
|
|
(163.3)
|
|
|
(65.3)
|
|
|
(82.1)
|
|
|
(88.8)
|
Gain (loss) on early extinguishment of debt
|
|
|
|
|
|
65.0
|
|
|
|
|
|
(54.6)
|
|
|
|
|
|
|
|
|
|
Settlement of contingent claims
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20.0)
|
|
|
|
Other (expense) income, net
|
|
|
(0.7)
|
|
|
(1.1)
|
|
|
2.7
|
|
|
0.1
|
|
|
|
|
|
13.2
|
|
|
(0.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
196.1
|
|
|
192.7
|
|
|
109.0
|
|
|
(0.5)
|
|
|
52.2
|
|
|
131.0
|
|
|
152.0
|
Provision for income taxes
|
|
|
75.2
|
|
|
73.0
|
|
|
42.0
|
|
|
3.7
|
|
|
16.0
|
|
|
36.4
|
|
|
58.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before extraordinary gain
|
|
|
120.9
|
|
|
119.7
|
|
|
67.0
|
|
|
(4.2)
|
|
|
36.2
|
|
|
94.6
|
|
|
93.6
|
Extraordinary gain
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
120.9
|
|
$
|
119.7
|
|
$
|
67.7
|
|
$
|
(4.2)
|
|
$
|
36.2
|
|
$
|
94.6
|
|
$
|
93.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share before extraordinary gain:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
6.26
|
|
$
|
6.20
|
|
$
|
3.30
|
|
$
|
(0.20)
|
|
$
|
1.82
|
|
$
|
4.89
|
|
$
|
4.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
6.22
|
|
$
|
6.17
|
|
$
|
3.30
|
|
$
|
(0.20)
|
|
$
|
1.78
|
|
$
|
4.86
|
|
$
|
4.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extraordinary gain per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
|
|
$
|
|
|
$
|
0.04
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
|
|
$
|
|
|
$
|
0.04
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
6.26
|
|
$
|
6.20
|
|
$
|
3.34
|
|
$
|
(0.20)
|
|
$
|
1.82
|
|
$
|
4.89
|
|
$
|
4.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
6.22
|
|
$
|
6.17
|
|
$
|
3.34
|
|
$
|
(0.20)
|
|
$
|
1.78
|
|
$
|
4.86
|
|
$
|
4.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
September 30,
|
|
|
2010(a)
|
|
2009(b)
|
|
2008(c)
|
|
2007(d)
|
|
2006
|
|
2011(e)
|
|
2010
|
|
|
(in millions)
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,769.1
|
|
$
|
3,686.0
|
|
$
|
3,783.1
|
|
$
|
3,811.7
|
|
$
|
1,455.4
|
|
$
|
3,813.4
|
|
$
|
3,750.4
|
Long-term debt including current portion and short-term
borrowings(f)
|
|
|
2,250.7
|
|
|
2,316.2
|
|
|
2,482.6
|
|
|
2,475.6
|
|
|
692.7
|
|
|
2,225.1
|
|
|
2,270.4
|
Stockholders equity
|
|
|
642.5
|
|
|
514.0
|
|
|
380.3
|
|
|
405.5
|
|
|
410.5
|
|
|
732.6
|
|
|
606.2
|
|
|
|
(a)
|
|
Includes the financial position
and results of operations of Spectrum K12 School Solutions, Inc.
from the date of its acquisition on July 21, 2010 and the
financial position and results of operations of Parsam
Technologies, LLC and SRC Software Private Limited from the date
of acquisition on December 6, 2010. Includes the results of
operations of SubscriberMail from the date of its acquisition on
December 31, 2009.
|
|
(b)
|
|
Includes the financial position of
SubscriberMail from the date of its acquisition on
December 31, 2009 and the financial position and results of
operations of Protocol Integrated Marketing Services, a division
of Protocol Global Solutions, from the date of its acquisition
on December 4, 2009.
|
|
(c)
|
|
Includes the financial position
and results of operations of Data Management I LLC from the date
of its acquisition on February 22, 2008 and financial
position of Transaction Holdings Inc. from the date of its
acquisition on December 31, 2008.
|
102
|
|
|
(d)
|
|
Includes the financial position
and results of operations of John H. Harland Company from the
date of its acquisition on May 1, 2007 and financial
position and the results of operations of Wei Feng Enterprises
Limited from the date of its acquisition on July 2, 2007.
|
|
(e)
|
|
Includes the financial position
and results of operations of KUE Digital Inc., KUED Sub I LLC
and KUED Sub II LLC, collectively the Companys
GlobalScholar business, from the date of acquisition on
January 3, 2011.
|
|
(f)
|
|
Includes capital leases of
$4.6 million, $5.7 million, $2.6 million,
$3.4 million and $4.6 million at December 31,
2010, 2009, 2008, 2007 and 2006, respectively and
$3.5 million and $4.7 million at September 30,
2011 and 2010, respectively.
|
Ratio of
Earnings to Fixed Charges
The following table presents our ratio of earnings to fixed
charges for the fiscal periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Nine Months
|
|
|
|
December 31,
|
|
|
Ended September 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2011
|
|
|
2010
|
|
|
|
(in millions)
|
|
|
Computation of earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
196.1
|
|
|
$
|
192.7
|
|
|
$
|
109.0
|
|
|
$
|
(0.5
|
)
|
|
$
|
52.2
|
|
|
$
|
131.00
|
|
|
$
|
152.0
|
|
Fixed charges
|
|
|
133.4
|
|
|
|
154.7
|
|
|
|
208.1
|
|
|
|
187.2
|
|
|
|
76.1
|
|
|
|
91.5
|
|
|
|
99.2
|
|
Amortization of capitalized interest
|
|
|
0.5
|
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.3
|
|
Capitalized interest
|
|
|
(0.1
|
)
|
|
|
(0.3
|
)
|
|
|
(0.7
|
)
|
|
|
(0.4
|
)
|
|
|
(1.0
|
)
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
$
|
329.9
|
|
|
$
|
347.5
|
|
|
$
|
316.7
|
|
|
$
|
186.5
|
|
|
$
|
127.4
|
|
|
$
|
222.6
|
|
|
$
|
251.4
|
|
Computation of fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
117.8
|
|
|
$
|
139.1
|
|
|
$
|
190.9
|
|
|
$
|
172.7
|
|
|
$
|
68.0
|
|
|
$
|
82.4
|
|
|
$
|
89.5
|
|
Capitalized interest
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.7
|
|
|
|
0.4
|
|
|
|
1.0
|
|
|
|
0.2
|
|
|
|
0.1
|
|
Amortization of deferred financing fees and original discount
|
|
|
7.7
|
|
|
|
7.3
|
|
|
|
8.2
|
|
|
|
7.9
|
|
|
|
4.3
|
|
|
|
5.2
|
|
|
|
5.5
|
|
Interest portion of operating lease expense
|
|
|
7.8
|
|
|
|
8.0
|
|
|
|
8.3
|
|
|
|
6.2
|
|
|
|
2.8
|
|
|
|
3.7
|
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed charges
|
|
$
|
133.4
|
|
|
$
|
154.7
|
|
|
$
|
208.1
|
|
|
$
|
187.2
|
|
|
$
|
76.1
|
|
|
$
|
91.5
|
|
|
$
|
99.2
|
|
Ratio of earnings to fixed charges
|
|
|
2.5
|
|
|
|
2.2
|
|
|
|
1.5
|
|
|
|
1.0
|
|
|
|
1.7
|
|
|
|
2.4
|
|
|
|
2.5
|
|
Book
Value Per Share
Our net book value per share as of September 30, 2011 is
$37.89 (calculated based on 19,333,931 shares outstanding
as of such date).
103
Market
Price and Dividend Information
The common stock is traded on NYSE under the symbol
MFW.
The following table sets forth during the periods indicated the
high and low sales prices of common stock:
|
|
|
|
|
|
|
|
|
|
|
Market Price
|
|
|
|
High
|
|
|
Low
|
|
|
2011
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
26.14
|
|
|
$
|
21.36
|
|
Second Quarter
|
|
$
|
26.84
|
|
|
$
|
16.77
|
|
Third Quarter
|
|
$
|
26.99
|
|
|
$
|
18.71
|
|
Fourth Quarter (through November 14, 2011)
|
|
$
|
25.28
|
|
|
$
|
24.31
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
42.75
|
|
|
$
|
30.25
|
|
Second Quarter
|
|
$
|
34.02
|
|
|
$
|
26.01
|
|
Third Quarter
|
|
$
|
29.88
|
|
|
$
|
22.37
|
|
Fourth Quarter
|
|
$
|
28.31
|
|
|
$
|
21.99
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
17.26
|
|
|
$
|
7.70
|
|
Second Quarter
|
|
$
|
27.15
|
|
|
$
|
11.26
|
|
Third Quarter
|
|
$
|
21.51
|
|
|
$
|
17.37
|
|
Fourth Quarter
|
|
$
|
43.28
|
|
|
$
|
19.15
|
|
The closing sale price of our common stock on June 10,
2011, which was the last trading day before Holdings announced
its proposal to acquire all outstanding shares of common stock
not owned by it, was $16.96 per share, compared to which the
merger consideration represents a premium of approximately 47%.
We have not paid any cash dividend on the common stock in the
past two years and do not intend to pay regular cash dividends
on the common stock. Our board of directors expects to review
our dividend policy from time to time in light of our results of
operations and financial position and such other business
considerations as our board of directors considers relevant.
Mafco Flavors credit agreement and HCHCs credit
agreement and indenture limit Mafco Flavors and
HCHCs respective ability to pay dividends to us, which in
turn may limit our ability to pay dividends to our stockholders.
104
IMPORTANT
INFORMATION REGARDING THE HOLDINGS FILING PERSONS
AND THEIR DIRECTORS AND EXECUTIVE OFFICERS
Information
Regarding Holdings
Holdings is a Delaware corporation with principal offices
located at 35 East 62nd Street, New York, NY 10065
(telephone:
212-572-8600).
Holdings is a diversified holding company with interests in
biotechnology, check printing and check related products and
services, consumer products, defense, education, entertainment,
financial services, gaming and other industries. The capital
stock of Holdings is 100% owned by Mr. Perelman.
During the last five years, Holdings has not been
(i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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 Holdings 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.
Information
Regarding Parent
Parent is a Delaware corporation with principal offices located
at 35 East 62nd Street, New York, NY 10065 (telephone:
212-572-8600).
Parent is a wholly owned subsidiary of Holdings and was formed
solely for the purpose of holding the shares of common stock of
Merger Sub and other related transactions, and Parent has not
engaged in any business other than in connection with the merger
and other related transactions.
During the last five years, Parent has not been
(i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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 Parent 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.
Information
Regarding Merger Sub
Merger Sub is a Delaware corporation with principal offices
located at 35 East 62nd Street, New York, NY 10065
(telephone:
212-572-8600).
Merger Sub is a wholly owned subsidiary of Parent and was formed
solely for the purpose of engaging in the merger and other
related transactions. Merger Sub has not engaged in any business
other than in connection with the merger and other related
transactions.
During the last five years, Merger Sub has not been
(i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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 Merger Sub 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.
105
Information
Regarding MFW Holdings One
MFW Holdings One is a Delaware limited liability company with
principal offices located at 35 East 62nd Street, New York,
NY 10065 (telephone:
212-572-8600).
MFW Holdings One is a wholly owned subsidiary of Holdings and
was formed solely for the purpose of owning common stock and
other related transactions.
During the last five years MFW Holdings One has not been
(i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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 MFW Holdings One
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.
Information
Regarding MFW Holdings Two
MFW Holdings Two is a Delaware limited liability company with
principal offices located at 35 East 62nd Street, New York,
NY 10065 (telephone:
212-572-8600).
MFW Holdings Two is a wholly owned subsidiary of Holdings and
was formed solely for the purpose of owning common stock and
other related transactions.
During the last five years MFW Holdings Two has not been
(i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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 MFW Holdings Two
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.
Information
Regarding Ronald O. Perelman
For additional information regarding Mr. Perelman, see
Important Information Regarding M & F
Worldwide and its Directors and Executive Officers
above.
Information
Regarding the Directors and Executive Officers of the Holdings
Filing Persons
The directors and executive officers of Holdings are
Mr. Perelman, Mr. Schwartz and Mr. Savas. The
directors and executive officers of Parent and Merger Sub are
Mr. Perelman, Mr. Schwartz, and Mr. Savas. The
directors and executive officers of MFW Holdings One and
MFW Holdings Two are Mr. Perelman, Mr. Schwartz
and Mr. Savas.
During the last five years none of the directors and executive
officers of the Holdings Filing Persons has been
(i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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.
For additional information regarding Mr. Perelman,
Mr. Schwartz and Mr. Savas, see
Important
Information Regarding M & F Worldwide and its
Directors and Executive Officers
above.
106
OWNERSHIP
OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS WITH RESPECT
TO
COMMON STOCK
Ownership
of Common Stock by Certain Beneficial Owners, Directors and
Executive Officers
The following table sets forth, as of November 14, 2011,
and based on 19,333,931 outstanding shares of common stock, the
number and percentage of outstanding shares of common stock
beneficially owned by each person known by us to beneficially
own more than 5% of such stock, by each director and named
executive officer of the Company and by all directors and
executive officers of the Company as a group:
|
|
|
|
|
|
|
Name
|
|
|
Shares Beneficially
Owned
|
|
|
Percent of Class
|
MFW Holdings One LLC
|
|
|
7,248,000(1)
|
|
|
37.5%
|
MFW Holdings Two LLC
|
|
|
1,012,666(1)
|
|
|
5.2%
|
Dimensional Fund Advisors LP
|
|
|
1,563,781(2)
|
|
|
8.1%
|
Philip E. Beekman
|
|
|
21,156(3)
|
|
|
*
|
William C. Bevins
|
|
|
6,430(4)
|
|
|
*
|
Martha L. Byorum
|
|
|
10,256(5)
|
|
|
*
|
Charles T. Dawson
|
|
|
-0-
|
|
|
*
|
Viet Dinh
|
|
|
25,907(6)
|
|
|
*
|
Theo W. Folz
|
|
|
20,256(7)
|
|
|
*
|
John M. Keane
|
|
|
12,830(8)
|
|
|
*
|
Paul M. Meister
|
|
|
113,795(9)
|
|
|
*
|
Ronald O. Perelman
|
|
|
8,394,000(10)
|
|
|
43.4%
|
Paul G. Savas
|
|
|
6,000
|
|
|
*
|
Barry F. Schwartz
|
|
|
10,000
|
|
|
*
|
Bruce Slovin
|
|
|
134,100(11)
|
|
|
*
|
Stephen G. Taub
|
|
|
-0-
|
|
|
*
|
Carl Webb
|
|
|
18,153(12)
|
|
|
*
|
All directors and executive officers as a group
(14 persons)
|
|
|
8,772,883
|
|
|
45.4%
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Indicates less than 1% ownership
|
(1) All of such shares of
Common Stock are beneficially owned by Ronald O. Perelman. MFW
Holdings One and MFW Holdings Two are wholly owned subsidiaries
of Holdings, of which Mr. Perelman owns 100%. Holdings may
be deemed to share beneficial ownership of the
8,260,666 shares of Common Stock beneficially owned by MFW
Holdings One and MFW Holdings Two and the 133,334 shares of
Common Stock deemed beneficially owned by Mr. Perelman as a
result of Mr. Perelmans grant of restricted stock, by
virtue of Holdings ownership of 100% of the common stock
of MFW Holdings One and MFW Holdings Two and
Mr. Perelmans 100% ownership of Holdings common
stock. The shares so owned and shares of intermediate holding
companies are, or may from time to time be, pledged to secure
obligations of Holdings or its affiliates.
(2) Beneficial ownership is
based on a statement on Schedule 13G/A filed by Dimensional
Fund Advisors LP on February 11, 2011.
(3) Includes
10,256 shares that may be deemed to be beneficially owned
by Mr. Beekman as a result of his participation in the
Outside Directors Deferred Compensation Plan.
107
(4) Represents
6,430 shares that may be deemed to be beneficially owned by
Mr. Bevins as a result of his participation in the Outside
Directors Deferred Compensation Plan.
(5) Represents
10,256 shares that may be deemed to be beneficially owned
by Ms. Byorum as a result of her participation in the
Outside Directors Deferred Compensation Plan.
(6) Represents
25,907 shares that may be deemed to be beneficially owned
by Mr. Dinh as a result of his participation in the Outside
Directors Deferred Compensation Plan.
(7) Includes
10,256 shares that may be deemed to be beneficially owned
by Mr. Folz as a result of his participation in the Outside
Directors Deferred Compensation Plan.
(8) Represents
12,830 shares that may be deemed to be beneficially owned
by General Keane as a result of his participation in the Outside
Directors Deferred Compensation Plan.
(9) Includes
41,379 shares that may be deemed to be beneficially owned
by Mr. Meister as a result of his participation in the
Outside Directors Deferred Compensation Plan.
(10) Includes shares
indirectly owned by Mr. Perelman through Holdings.
(11) Of the shares set forth
in the table, 25,000 are held in trust for the benefit of a
minor child and 26,000 shares are owned directly by the
wife of Mr. Slovin. Mr. Slovin disclaims beneficial
ownership of such 51,000 shares. Includes
33,100 shares that may be deemed to be beneficially owned
by Mr. Slovin as a result of his participation in the
Outside Directors Deferred Compensation Plan.
(12) Represents
18,153 shares that may be deemed to be beneficially owned
by Mr. Webb as a result of his participation in the Outside
Directors Deferred Compensation Plan.
Transactions
in Common Stock by M & F Worldwide, the Holdings
Filing Persons and their Respective Directors and Executive
Officers
Other than the Contribution Agreement discussed in the section
entitled
Agreements Involving Common Stock;
Transactions Between Holdings Filing Persons and the
CompanyAgreements Involving Common Stock
,
M & F Worldwide, the Holdings Filing Persons and their
respective directors and executive officers have not made any
transactions with respect to common stock during the past
60 days.
108
AGREEMENTS
INVOLVING COMMON STOCK; TRANSACTIONS BETWEEN
HOLDINGS FILING PERSONS AND THE COMPANY
Agreements
Involving Common Stock
Contribution Agreement.
The Holdings Investors and
Merger Sub have entered into a letter agreement, dated as of
September 12, 2011, pursuant to which the Holdings
Investors agreed to contribute, immediately prior to the
effective time of the merger, shares of common stock held by
them to Merger Sub in exchange for shares of common stock of
Merger Sub.
The obligation of each Holdings Investor to deliver his or its
shares of common stock to Merger Sub is subject to the
satisfaction or waiver of each of the obligations of Parent,
Merger Sub and the Company to consummate the transactions under
the Merger Agreement and will occur contemporaneously with the
consummation of the merger. The shares of common stock
contributed by the Holdings Investors to Merger Sub will be
canceled, and will not be entitled to receive any merger
consideration upon completion of the merger. The letter will be
terminated upon the earlier of the closing of the merger and the
termination of the Merger Agreement.
Pledge Agreement.
On May 18, 2007, pursuant to
a revolving credit agreement, dated as of May 18, 2007,
between MFW Holdings One, as borrower, and Deutsche Bank, as
lender, MFW Holdings One entered into a Pledge and Security
Agreement with Deutsche Bank pursuant to which Holdings One
pledged to Deutsche Bank all of its shares of common stock.
Stockholders Agreement.
On January 20, 2009,
the Company and Holdings entered into a Stockholders Agreement.
Pursuant to the Stockholders Agreement, Holdings agreed to
provide advance notice and make certain representations and
warranties to the Company in the event of certain future
acquisitions of common stock of the Company. In addition,
Holdings agreed that, so long as the Company has public equity
securities outstanding, Holdings would use its best efforts to
assure that the Company will continue to maintain a board of
directors comprised of a majority of independent directors
(under applicable stock exchange rules) and nominating and
compensation committees comprised solely of independent
directors.
Registration Rights Agreement.
A subsidiary of
Holdings, Mafco Consolidated Group LLC, referred to herein as
MCG, and the Company are parties to a registration
rights agreement (as amended, the Company/MCG Consolidated
Registration Rights Agreement) providing MCG with the
right to require the Company to use its best efforts to register
under the Securities Act of 1933, as amended, referred to herein
as the Securities Act, and the securities or blue
sky laws of any jurisdiction designated by MCG, all or portion
of the issued and outstanding common stock owned by MCG or any
of its affiliates, including the Holdings Investors, referred to
herein as the Registrable Shares. Such demand rights
are subject to the conditions that the Company is not required
to (i) effect a demand registration more than once in any
12-month
period, (ii) effect more than one demand registration with
respect to the Registrable Shares, or (iii) file a
registration statement during periods (not to exceed three
months) (a) when the Company is contemplating a public
offering, (b) when the Company is in possession of certain
material non-public information, or (c) when audited
financial statements are not available and their inclusion in a
registration statement is required. In addition, and subject to
certain conditions described in the Company/MCG Consolidated
Registration Rights Agreement, if at any time the Company
proposes to register under the Securities Act an offering of
common stock or any other class of equity securities, then MCG
will have the right to require the Company to use its best
efforts to effect the registration under the
109
Securities Act and the securities or blue sky laws of any
jurisdiction designated by MCG of all or a portion of the
Registrable Shares as designated by MCG. The Company is
responsible for all expenses relating to the performance of, or
compliance with, the Company/MCG Registration Rights Agreement
except that the seller of the Registrable Shares is responsible
for underwriters discounts and selling commissions with
respect to the Registrable Shares it sells.
Transactions
between Holdings Filing Persons and the Company
Pneumo Abex Transfer Agreement and Settlement
Agreement.
In 1995, MCG Intermediate Holdings Inc., a
subsidiary of Holdings, referred to herein as MCGI,
the Company and two of the Companys subsidiaries entered
into a transfer agreement, referred to herein as the
Transfer Agreement, which required MCGI to undertake
certain administrative and funding obligations with respect to
certain categories of contingent liabilities of Pneumo Abex LLC
(which was until April 2011 an indirect, wholly owned subsidiary
of the Company, referred to herein as Pneumo Abex)
that were subject to indemnification by third parties. Among the
indemnified liabilities are certain environmental and
asbestos-related claims, as well as certain tax and other
matters. Pursuant to the Transfer Agreement, Pneumo Abex was
obligated to reimburse the amounts funded by MCGI only when it
received amounts under related indemnification and insurance
agreements with third parties. In the event of certain kinds of
disputes with Pneumo Abexs indemnitors regarding their
indemnities, the Transfer Agreement permitted Pneumo Abex to
require MCGI to fund 50% of the costs of resolving the
disputes.
On April 5, 2011, the Company, Pneumo Abex, Mafco Flavors,
PCT International Holdings Inc. (a wholly owned subsidiary of
the Company), Cooper Industries plc, Cooper Industries Ltd.,
Cooper Holdings, Ltd., Cooper US Inc. and Cooper Industries,
LLC, collectively referred to herein as Cooper,
entered into an agreement, referred to herein as the
Settlement Agreement to settle various claims
relating to Coopers indemnification obligations to Pneumo
Abex. Pursuant to the Settlement Agreement, on April 5,
2011, a subsidiary of the Company transferred all of the
membership interests in Pneumo Abex to a Delaware statutory
trust, referred to herein as the Settlement Trust,
and the Settlement Trust became the sole owner and managing
member of Pneumo Abex. The Company and its subsidiaries also
contributed a total of $15 million to Pneumo Abex and paid
$5 million to the Settlement Trust. Concurrently, Cooper
paid $250 million to the Settlement Trust and gave it a
promissory note in the amount of $57.5 million, subject to
certain adjustments, payable over four years and guaranteed by
certain parent entities of Cooper. As a result of these
transactions, the Company and its affiliates received an
indemnity from the Settlement Trust against any liability for
the matters formerly subject to the Cooper indemnity.
In connection with the Settlement Agreement, the Transfer
Agreement was amended such that Holdings and its subsidiaries
are no longer obliged to undertake obligations with respect to
Pneumo Abexs contingent liabilities.
Management Services Agreement and Transaction
Fees.
Since 2005, Holdings has provided the services of
Mr. Schwartz, a director and the Chief Executive Officer of
the Company and Mr. Savas, the Companys Chief
Financial Officer, as well as other management, advisory,
transactional, corporate finance, legal, risk management, tax
and accounting services, pursuant to the terms of a management
services agreement, which has been amended from time to time.
Under the terms of the management services agreement, the
Company pays Holdings an annual fee for these services. The
annual rate is currently $10.0 million. In each of 2010 and
2009, the Company paid to Holdings $10.0 million for the
services provided pursuant to the management services agreement.
The
110
management services agreement renews year to year, unless either
party gives the other party written notice at least 90 days
prior to the end of the initial term or a subsequent renewal
period. The management services agreement will also terminate in
the event that Holdings or its affiliates no longer in the
aggregate retain beneficial ownership of 10% or more of the
outstanding common stock. The management services agreement also
contains customary indemnities covering Holdings and its
affiliates and personnel.
MacAndrews & Forbes Insurance
Programs.
The Company participates in Holdings
directors and officers insurance program, which covers the
Company as well as Holdings and its other affiliates. The limits
of coverage are available on aggregate losses to any or all of
the participating companies and their respective directors and
officers. The Company reimburses Holdings for its allocable
portion of the premiums for such coverage, which the Company
believes is more favorable than premiums the Company could
secure were it to secure its own coverage. In December 2008, the
Company elected to participate in third party financing
arrangements, together with MacAndrews & Forbes and
certain of MacAndrews Holdings affiliates, to finance a
portion of premium payments. The Company paid $1.1 million,
$0.8 million and $0.6 million to Holdings in 2010,
2009 and 2008, respectively, under the insurance programs,
including amounts due under the financing arrangements.
111
MULTIPLE
STOCKHOLDERS SHARING ONE ADDRESS
In accordance with
Rule 14a-3(e)(1)
under the Exchange Act, one proxy statement will be delivered to
two or more stockholders who share an address, unless
M & F Worldwide has received contrary instructions
from one or more of the stockholders. M & F Worldwide
will deliver promptly upon written or oral request a separate
copy of the proxy statement to a stockholder at a shared address
to which a single copy of the proxy statement was delivered.
Requests for additional copies of the proxy statement, and
requests that in the future separate proxy statements be sent to
stockholders who share an address, should be directed to
M & F Worldwides transfer agent, American Stock
Transfer & Trust Company, LLC, at 6201
15th Avenue, Brooklyn, NY 11219 or by calling
1-800-937-5449.
In addition, stockholders who share a single address but receive
multiple copies of the proxy statement may request that in the
future they receive a single copy by contacting American Stock
Transfer & Trust Company, LLC at the address and
phone number set forth in the prior sentence.
SUBMISSION
OF STOCKHOLDER PROPOSALS
If the merger is completed, we do not expect to hold an annual
meeting of stockholders in 2012. If the merger is not completed,
you will continue to be entitled to attend and participate in
our annual meetings of stockholders and we will hold a 2012
annual meeting of stockholders, in which case we will provide
notice of or otherwise publicly disclose the date on which such
2012 annual meeting will be held. If the 2012 meeting is held,
stockholder proposals will be eligible for consideration for
inclusion in the proxy statement and form of proxy for our 2012
annual meeting of stockholders in accordance with
Rule 14a-8
under the Exchange Act and our Amended and Restated By-laws, as
described below.
Pursuant to
Rule 14a-8
under the Exchange Act, any holder of at least $2,000 in market
value of common stock who has held such securities for at least
one year and who desires to have a proposal presented in the
Companys proxy material for use in connection with the
annual meeting of stockholders to be held in 2012 must transmit
that proposal (along with his or her name, address, the number
of shares of common stock that he or she holds of record or
beneficially, the dates upon which the shares of common stock
were acquired, documentary support for a claim of beneficial
ownership and a statement of willingness to hold such common
stock through the date of the annual meeting of stockholders to
be held in 2012) in writing to the Secretary, M &
F Worldwide Corp., 35 East 62nd Street, New York, New
York 10065, no later than December 24, 2011 (not less than
120 calendar days before the first anniversary of the date
(April 22, 2011) of the Companys proxy materials
for its 2011 annual meeting), unless the 2012 annual meeting is
to be held on a date which is not within 30 days before or
after the anniversary of the 2011 annual meeting, in which case
the deadline is a reasonable time before the Company begins to
print and send its proxy materials.
In accordance with the Companys Amended and Restated
By-laws, proposals of stockholders made outside of
Rule 14a-8
under the Exchange Act (which the Company will not be required
to include in its proxy material) must be submitted not less
than 30 days nor more than 60 days prior to the date
of the 2012 annual meeting, provided that if notice or public
disclosure of the date of the 2012 annual meeting by the Company
is given or made less than 40 days prior to the date of the
2012 annual meeting, such proposals must be submitted within ten
days following notice or public disclosure by the Company.
Please note that these requirements are separate from the
SECs requirements to have your proposal included in our
proxy materials.
112
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
The Company files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any reports, proxy statements or other information that we
file with the SEC at the following location of the SEC:
Public Reference Room
100 F Street, N.E.
Washington, D.C. 20549
Please call the SEC at
1-800-SEC-0330
for further information on the public reference room. You may
also obtain copies of this information by mail from the Public
Reference Section of the SEC, 100 F Street, N.E.,
Washington, D.C. 20549, at prescribed rates. The
Companys public filings are also available to the public
from document retrieval services and the Internet website
maintained by the SEC at www.sec.gov.
The Company will make available a copy of its public reports,
without charge, upon written request to the Secretary,
M & F Worldwide Corp., 35 East 62nd Street, New
York, New York 10065. Each such request must set forth a good
faith representation that, as of the record date, the person
making the request was a beneficial owner of common stock
entitled to vote at the special meeting. In order to ensure
timely delivery of such documents prior to the special meeting,
any such request should be made promptly to the Company. A copy
of any exhibit may be obtained upon written request by a
stockholder (for a fee limited to the Companys reasonable
expenses in furnishing such exhibit) to the Secretary,
M & F Worldwide Corp., 35 East 62nd Street, New
York, New York 10065.
Because the merger is a going private transaction,
the Company and the Holdings Filing Persons have filed with the
SEC a Transaction Statement on
Schedule 13E-3
with respect to the merger. The
Schedule 13E-3,
including any amendments and exhibits filed or incorporated by
reference as a part of it, is available for inspection as set
forth above. The
Schedule 13E-3
will be amended to report promptly any material change in the
information set forth in the most recent
Schedule 13E-3
filed with the SEC.
The SEC allows us to incorporate by reference into
this proxy statement documents we file with the SEC. This means
that we can disclose important information to you by referring
you to those documents. The information incorporated by
reference is considered to be a part of this proxy statement,
and later information that we file with the SEC will update and
supersede that information. We incorporate by reference the
documents listed below and any documents filed by us pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this proxy statement and prior to the date of the
special meeting (except with respect to any reference in such
document to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995):
Company
Filings
Annual Report on
Form 10-K
for the Fiscal Year Ended December 31, 2010
Quarterly Reports on
Form 10-Q
for the Quarters Ended March 31, 2011, June 30, 2011
and September 30, 2011
Definitive Proxy Statement for the Companys 2011 Annual
Meeting, filed
April 22, 2011
113
Current Reports on
Form 8-K,
filed January 3, 2011, January 6, 2011,
February 7, 2011, March 4, 2011, April 11, 2011,
May 5, 2011, May 12, 2011, May 13, 2011,
May 20, 2011, August 4, 2011, September 12, 2011
and November 3, 2011
No persons have been authorized to give any information or to
make any representations other than those contained in this
proxy statement and, if given or made, such information or
representations must not be relied upon as having been
authorized by us or any other person. This proxy statement is
dated November 18, 2011. You should not assume that the
information contained in this proxy statement is accurate as of
any date other than that date, and the mailing of this proxy
statement to stockholders shall not create any implication to
the contrary.
114
Annex A
AGREEMENT
AND PLAN OF MERGER
by and
among
MX
HOLDINGS ONE, LLC,
MX
HOLDINGS TWO, INC.,
and
M &
F WORLDWIDE CORP.
Dated
as of
September 12,
2011
TABLE OF
CONTENTS
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Page
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ARTICLE I
DEFINED TERMS
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Section 1.1
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Definitions
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1
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ARTICLE II
THE MERGER
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Section 2.1
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The Merger
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4
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Section 2.2
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Effective Time
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4
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Section 2.3
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Closing
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4
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Section 2.4
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Certificate of Incorporation; Bylaws; Directors and Officers
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5
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Section 2.5
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Effect of Merger on Capital Stock
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5
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Section 2.6
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Dissenting Shares
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5
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Section 2.7
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Exchange of Certificates; Payment for Common Stock
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6
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Section 2.8
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Deferred Stock Accounts
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8
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Section 2.9
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Adjustments to Merger Consideration
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8
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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Section 3.1
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Organization and Qualification
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8
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Section 3.2
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Capitalization
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8
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Section 3.3
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Subsidiaries
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9
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Section 3.4
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Authorization; Approval and Fairness
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9
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Section 3.5
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Consents
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9
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Section 3.6
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Brokers and Finders
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10
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Section 3.7
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Proxy Statement;
Schedule 13E-3
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10
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Section 3.8
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SEC Documents; Financial Statements; Sarbanes-Oxley
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10
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Section 3.9
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Absence of Certain Changes or Events
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11
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Section 3.10
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No Undisclosed Liabilities
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11
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Section 3.11
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Compliance with Laws
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11
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Section 3.12
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Legal Proceedings
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11
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Section 3.13
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Intellectual Property
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11
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Section 3.14
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Contracts
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12
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Section 3.15
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Takeover Statutes
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12
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
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Section 4.1
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Organization and Qualification
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12
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Section 4.2
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Authorization
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12
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Section 4.3
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Consents
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12
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Section 4.4
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Financing
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13
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Section 4.5
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Brokers and Finders
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13
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Section 4.6
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Proxy Statement;
Schedule 13E-3
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13
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Section 4.7
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Solvency of Parent and the Surviving Corporation
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13
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Section 4.8
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Ownership of Shares
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13
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Section 4.9
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No Other Representations or Warranties
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14
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A-i
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Page
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ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS
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Section 5.1
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Certain Actions Pending Merger
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14
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Section 5.2
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Proxy Statement
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15
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Section 5.3
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Stockholders Meeting
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16
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Section 5.4
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No Solicitation; No Adverse Company Recommendation
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16
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Section 5.5
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Reasonable Best Efforts
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18
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Section 5.6
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Access
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19
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Section 5.7
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Notification of Certain Matters
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19
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Section 5.8
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Public Announcements
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19
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Section 5.9
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Directors and Officers Indemnification
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19
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Section 5.10
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Stockholder Litigation
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20
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Section 5.11
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Rule 16b-3
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20
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Section 5.12
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Knowledge of Inaccuracies
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20
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ARTICLE VI
CONDITIONS PRECEDENT
|
Section 6.1
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Conditions to each Partys Obligation to Effect the Merger
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20
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Section 6.2
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Conditions to the Obligation of the Company to Effect the Merger
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21
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Section 6.3
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Conditions to the Obligation of Purchasers to Effect the Merger
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21
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ARTICLE VII
TERMINATION
|
Section 7.1
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Termination
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21
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Section 7.2
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Effect of Termination
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22
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Section 7.3
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Termination Fee
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22
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ARTICLE VIII
MISCELLANEOUS
|
Section 8.1
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Non-Survival of Representations and Warranties
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23
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Section 8.2
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Amendment
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23
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Section 8.3
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Waiver
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23
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Section 8.4
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Special Committee Approval
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24
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Section 8.5
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Expenses
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24
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Section 8.6
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Guarantee
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24
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Section 8.7
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Actions by Dual Employees
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24
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Section 8.8
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Applicable Law; Jurisdiction; Specific Performance
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24
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Section 8.9
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Notices
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24
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Section 8.10
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Entire Agreement
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25
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Section 8.11
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Assignment
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25
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Section 8.12
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Construction; Interpretation
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26
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Section 8.13
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Counterparts
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26
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Section 8.14
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Transfer Taxes
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26
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Section 8.15
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No Third Party Beneficiaries
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26
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Section 8.16
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Severability; Enforcement
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26
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A-ii
INDEX OF
DEFINED TERMS
|
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Acceptable Confidentiality Agreement
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2
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Acquisition Proposal
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2
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Adverse Company Recommendation
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24
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Affiliates
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2
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Agreement
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1
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Benefit Plan
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2
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Book-Entry Shares
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8
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Business Day
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2
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Bylaws
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6
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Certificate of Incorporation
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6
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Certificate of Merger
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6
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Certificates
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8
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Closing
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6
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Closing Date
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6
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Code
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3
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Common Stock
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1
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Company
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1
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Company Board
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1
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Company Disclosure Schedule
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11
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Company IP
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16
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Company Recommendation
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13
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Company Stockholders Meeting
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23
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Company Subsidiaries
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12
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Contract
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3
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Contributing Stockholders
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1
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Control
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3
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Covered Person
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28
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DGCL
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1
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Dissenting Shares
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7, 8
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Dual Employee
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3
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Effective Time
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6
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Equity Contribution
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1
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ERISA
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2
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Exchange Act
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3
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Exchange Fund
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8
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Excluded Shares
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7
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GAAP
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3
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Governmental Entity
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3
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HSR Act
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14
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Intellectual Property
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16
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Intervening Event
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3
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Judgment
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3
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Knowledge
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3
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Law
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3
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A-iii
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Liabilities
|
|
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4
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Lien
|
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4
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M&F
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1
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Material Adverse Effect
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4
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Material Contract
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17
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Maximum Premium
|
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29
|
|
Merger
|
|
|
1
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|
Merger Consideration
|
|
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7
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|
Merger Sub
|
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1
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|
Merger Sub Common Stock
|
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1
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Parent
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1
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Parent Expenses
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33
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Party
|
|
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4
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Paying Agent
|
|
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8
|
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Person
|
|
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5
|
|
Proxy Statement
|
|
|
22
|
|
Public Stockholders
|
|
|
5
|
|
Purchasers
|
|
|
1
|
|
Representatives
|
|
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23
|
|
Required Stockholder Vote
|
|
|
12
|
|
Schedule 13E-3
|
|
|
22
|
|
SEC
|
|
|
5
|
|
SEC Documents
|
|
|
15
|
|
Securities Act
|
|
|
5
|
|
Software
|
|
|
17
|
|
Special Committee
|
|
|
1
|
|
Subsidiary
|
|
|
5
|
|
Superior Proposal
|
|
|
5
|
|
Surviving Corporation
|
|
|
6
|
|
Tax
|
|
|
5
|
|
Tax Return
|
|
|
5
|
|
Termination Fee
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|
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33
|
|
A-iv
AGREEMENT
AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER
, dated as of
September 12, 2011 (this
Agreement
), by
and among MX Holdings One, LLC, a Delaware limited liability
company (
Parent
), MX Holdings Two, Inc., a
Delaware corporation (
Merger Sub
and,
together with Parent,
Purchasers
),
M & F Worldwide Corp., a Delaware corporation (the
Company
), and, solely with respect to
Section 5.3(a)
and
Article VIII
,
MacAndrews & Forbes Holdings Inc., a Delaware
corporation (
M&F
).
RECITALS:
WHEREAS, the parties intend that Merger Sub be merged with and
into the Company with the Company as the surviving entity in
accordance with the Delaware General Corporation Law (the
DGCL
), upon the terms and subject to
the conditions of this Agreement (the
Merger
);
WHEREAS, in the Merger, upon the terms and subject to the
conditions of this Agreement, each share of common stock, par
value $.01 per share, of the Company (
Common
Stock
), other than Excluded Shares and Dissenting
Shares, will be converted into the right to receive $25.00 per
share in cash;
WHEREAS, the board of directors of the Company (the
Company Board
) (upon the recommendation of a
special committee consisting of certain independent members of
the Company Board (the
Special Committee
))
has (i) approved the terms of this Agreement and the
Merger, (ii) determined that the Merger is fair to and in
the best interest of the Company and the Public Stockholders,
and (iii) resolved to recommend that the stockholders of
the Company approve the adoption of this Agreement and the
Merger;
WHEREAS, the sole member of Parent and the board of directors of
Merger Sub have each approved this Agreement and the Merger and
declared it advisable for Parent and Merger Sub, as applicable,
to enter into this Agreement; and
WHEREAS, pursuant to a letter entered into as of the date of
this Agreement, certain existing stockholders of the Company
that are Affiliates of the Purchasers (the
Contributing
Stockholders
) have agreed to contribute (the
Equity Contribution
) Common Stock to Merger
Sub immediately prior to the Effective Time in exchange for
shares of common stock, par value $.01, of Merger Sub
(
Merger Sub Common Stock
), such that
immediately following such Equity Contribution Merger Sub will
be
wholly-owned
by Parent and the Contributing Stockholders.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements
set forth in this Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINED
TERMS
Section
1.1
Definitions.
In
this Agreement, unless the context otherwise requires, the
following terms have the following meanings:
Acceptable Confidentiality Agreement
means a
confidentiality agreement between the Company and a Person
making an Acquisition Proposal entered into in accordance with
the terms and conditions set forth in
Section 5.4
,
and on terms and conditions customary with respect to
transactions of the nature contemplated by such Acquisition
Proposal.
Acquisition Proposal
means any proposal or
offer relating to (a) a merger, consolidation, share
exchange or business combination involving the Company or any
Company Subsidiaries representing 10% or more of the assets of
the Company and the Company Subsidiaries, taken as a whole,
(b) a sale, lease, exchange, mortgage, transfer or other
disposition, in a single transaction or series of related
transactions, of 10% or more of the assets of the Company and
the Company Subsidiaries, taken as a whole, (c) a purchase
or sale of shares of capital stock or other securities, in a
single transaction or series of related transactions,
representing 10% or more of the voting power of the capital
stock of the Company, including
A-1
by way of a tender offer or
exchange offer or (d) any other transaction having a
similar effect to those described in clauses (a) through
(c).
Affiliates
means, with respect to any Person,
any other Person that directly or indirectly Controls, is
Controlled by or is under common Control with, such Person;
provided
that (a) M&F and its Affiliates (other
than the Company and the Company Subsidiaries) shall not be
deemed to be Affiliates of the Company and the Company
Subsidiaries and (b) the Company and the Company
Subsidiaries shall not be deemed to be Affiliates of M&F
and its Affiliates (other than the Company and the Company
Subsidiaries) for any purpose hereunder.
Benefit Plan
means each deferred compensation
and each bonus or other incentive compensation, stock purchase,
stock option and other equity compensation plan, program,
agreement or arrangement; each severance or termination pay,
medical, surgical, hospitalization, life insurance and other
welfare plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act
of 1974, as amended (
ERISA
)); each
profit-sharing, stock bonus or other pension plan,
fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and
each other material employee benefit plan, fund, program,
agreement or arrangement, in each case, that is sponsored,
maintained or contributed to or required to be contributed to by
the Company or any of the Company Subsidiaries for the benefit
of directors, employees or former employees of the Company or
any of the Company Subsidiaries.
Business Day
means any day other than
Saturday, Sunday or a day on which commercial banks in New York,
New York are authorized or required by Law to close.
Code
means the US Internal Revenue Code of
1986, as amended.
Contract
means any contract, license, lease,
commitment, arrangement, purchase or sale order, undertaking,
understanding or other agreement, whether written or oral.
Control
means the power to direct or cause
the direction of management or policies of a Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise.
Dual Employee
means each of the persons
listed in Section 1.1 of the Company Disclosure Schedule
and any other director of or Person employed by M&F, any
Purchaser or any of their respective Affiliates who is a
director or employee of or provides services to the Company or
any Company Subsidiary pursuant to contractual obligations or
otherwise.
Exchange Act
means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated under such Exchange Act from time to time.
GAAP
means accounting principles and
practices generally accepted in the United States.
Governmental Entity
means: (a) any
federal, state, local, municipal, foreign or international
government or governmental authority, regulatory or
administrative agency, governmental commission, department,
board, bureau, agency or instrumentality, court, tribunal,
arbitrator or arbitral body or any body exercising or entitled
to exercise any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of
any nature, (b) any self-regulatory organization or
(c) any subdivision of any of the foregoing.
Intervening Event
means a material event,
change, development, effect, occurrence or state of facts that
was not known or reasonably foreseeable to the Company Board or
the Special Committee on the date of this Agreement, and becomes
known to the Company Board or the Special Committee before the
Required Stockholder Vote; provided, that in no event shall the
receipt, existence of or terms of an Acquisition Proposal or any
inquiry relating thereto constitute an Intervening Event.
Judgment
means any judgment, order, award,
writ, injunction or decree of any Governmental Entity or
arbitrator.
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Knowledge
means, with respect to any Person,
the knowledge of such Person after reasonable inquiry.
Law
means any law, statute, ordinance, code,
regulation, rule or other requirement of any Governmental Entity.
Liabilities
means any liabilities or
obligations of any kind, whether accrued, contingent, known or
unknown, absolute, inchoate or otherwise.
Lien
means any mortgage, pledge, lien,
charge, restriction, claim or encumbrance of any nature
whatsoever (other than Liens for or with respect to Taxes that
are not yet due and payable or delinquent), including any
restriction on use, transfer, voting or other exercise of any
attributes of ownership.
Material Adverse Effect
means any change,
development or event that, individually or in the aggregate, has
had or would reasonably be expected to have a material adverse
effect on the operations, business, properties, Liabilities or
condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole;
provided
, that the term
Material Adverse Effect
shall not include any
such effect relating to or arising from (a) changes in the
economy or financial markets generally in the United States or
other countries in which the Company conducts material
operations, (b) the occurrence, escalation, outbreak or
worsening of any war, acts of terrorism or military conflicts in
the United States or other countries in which the Company
conducts material operations, (c) changes generally
affecting the industries in which the Company and its
Subsidiaries operate, (d) changes in any applicable Laws or
GAAP or principles, interpretations or enforcement thereof,
(e) the existence, occurrence or continuation of any force
majeure events, including any earthquakes, floods, hurricanes,
tropical storms, fires or other natural disasters, (f) any
failure by the Company to meet any published analyst estimates
or expectations of the Companys revenue, earnings or other
financial performance or results of operations for any period,
in and of itself, or any failure by the Company to meet its
internal or published projections, budgets, plans or forecasts
of its revenues, earnings, or other financial performance or
results of operations, in and of itself (provided, that the
facts or occurrences giving rise to or contributing to such
failure to the extent not otherwise excluded from the definition
of Material Adverse Effect may be taken into account
in determining whether there has been a Material Adverse
Effect), (g) the announcement of the execution of this
Agreement and the transactions contemplated hereby, including
the initiation or continuation of litigation by any Person with
respect to or related to the subject matter of this Agreement,
and including any termination of, reduction in or similar
negative impact on relationships, contractual or otherwise
(including loan agreements or any other financing sources), with
any customers, suppliers, lenders, distributors, partners or
employees of the Company and its Subsidiaries, or the identity
of the parties to this Agreement, (h) any action taken or
not taken by the Company or any Company Subsidiary, in each case
which is required by this Agreement (provided that this
clause (h) shall not apply with respect to any action taken
pursuant to the requirement that the Company and the Company
Subsidiaries conduct their business in all material respects in
the ordinary course of business consistent with past practice),
or (i) any actions taken or not taken at the request of
Parent;
provided
,
however
, that, with respect to
clauses (a) through (e), effects resulting from any change,
event, circumstance or development that has had or would
reasonably be expected to have a disproportionate adverse effect
on the Company or any Company Subsidiary compared to other
companies operating in the industries in which the Company or
its Subsidiaries operate will be considered for purposes of
determining whether a Material Adverse Effect has occurred or is
reasonably likely to occur.
Party
means each party to this Agreement.
Person
means any individual, corporation,
general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, Governmental
Entity or other entity of any kind or nature.
Public Stockholders
means all of the holders
of outstanding shares of Common Stock, excluding M&F and
its Affiliates.
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Securities Act
means the Securities Act of
1933, as amended, and the rules and regulations of the SEC
promulgated under such Securities Act from time to time.
SEC
means the Securities and Exchange
Commission, and any successor or replacement entity.
Subsidiary
means, when used with respect to
any Person, any other Person that such Person directly or
indirectly owns or has the power to vote or control more than
50% of the voting stock or other interests the holders of which
are generally entitled to vote for the election of the board of
directors or other applicable governing body of such other
Person (or, in the case of a partnership, limited liability
company or other similar entity, control of the general
partnership, managing member or similar interests).
Superior Proposal
means an unsolicited
bona fide
Acquisition Proposal (except that references to
10% in the definition of such term will be deemed to
be references to 50%) made in writing and not
solicited in violation of
Section 5.4
that the
Company Board has determined in its good faith judgment
(a) is reasonably likely to be consummated in accordance
with its terms, taking into account all legal, financial and
regulatory aspects of the proposal and the Person making the
proposal (including any conditions relating to financing,
regulatory approvals or other events or circumstances beyond the
control of the party invoking the condition), and (b) if
consummated, would result in a transaction more favorable to the
Public Stockholders from a financial point of view (including
the effect of any termination fee or provision relating to the
reimbursement of expenses) than the transaction contemplated by
this Agreement (after taking into account any revisions to the
terms of the transaction contemplated by
Section 5.4(e)
of this Agreement and the time likely
to be required to consummate such Acquisition Proposal).
Tax
means all federal, state, local and
foreign income, profits, franchise, gross receipts,
environmental, customs duties, capital stock, severance, stamp,
payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added,
occupancy, license, estimated, real property, personal property,
windfall profits, occupation, premium, social security (or
similar), workers compensation, transfer, registration,
alternative or other tax, duty, fee or assessment of any nature
whatsoever, together with all interest, penalties and additions
imposed with respect to such amount and any interest in respect
of such penalties and additions and including any amount payable
pursuant to an obligation to indemnify or otherwise assume or
succeed to the Tax Liability of any other Person.
Tax Return
means all returns and reports
(including elections, declarations, disclosures, schedules,
estimates and information returns) supplied or required to be
supplied to a Tax authority relating to Taxes, including any
schedule or attachment thereto, and including any amendment
thereof, claim for refund, and declaration of estimated Tax.
ARTICLE II
THE
MERGER
Section
2.1
The
Merger
. At the Effective Time, upon the terms and
subject to the conditions of this Agreement and in accordance
with the DGCL, Merger Sub will be merged with and into the
Company, the separate existence of Merger Sub will cease, and
the Company will continue as the surviving corporation (the
Surviving Corporation
). The Merger will
have the effects as provided by the DGCL.
Section
2.2
Effective
Time.
As soon as practicable on the Closing Date,
Merger Sub and the Company will file with the Secretary of State
of the State of Delaware a certificate of merger (the
Certificate of Merger
) executed in accordance
with the relevant provisions of the DGCL. The Merger will become
effective at such time as the Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware, or
at such other time as is permissible in accordance with the DGCL
and as the Parties may agree, as specified in the Certificate of
Merger (the time the Merger becomes effective, the
Effective Time
).
Section
2.3
Closing.
Unless
otherwise agreed by the Parties in writing, the closing of the
Merger (the
Closing
) will take place at
the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, Four Times Square, New York, New York on the
third Business Day after the satisfaction or waiver (to the
extent permitted by this
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Agreement and applicable Law) of
the conditions (other than conditions that by their nature are
to be satisfied at the Closing but subject to such conditions
being satisfied) provided in Article VI (the date of the
Closing, the
Closing Date
).
Section
2.4
Certificate
of Incorporation; Bylaws; Directors and
Officers.
At the Effective Time:
(a) subject to
Section 5.9(a)
, the certificate
of incorporation of the Company shall be amended in the Merger
to read the same as the certificate of incorporation of Merger
Sub in effect immediately prior to the Effective Time, and as so
amended shall be the certificate of incorporation of the
Surviving Corporation (the
Certificate of
Incorporation
), until thereafter amended in accordance
with its terms and as provided by the DGCL;
(b) subject to
Section 5.9(a)
, the bylaws of
the Company shall be amended in the Merger to read the same as
the bylaws of Merger Sub in effect immediately prior to the
Effective Time, and as so amended shall be the bylaws of the
Surviving Corporation (the
Bylaws
), until
thereafter amended in accordance with its terms and as provided
by the DGCL;
(c) the directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving
Corporation following the Merger until the earlier of (i) their
death, resignation or removal or (ii) such time as their
respective successors are duly elected or appointed as provided
in the Certificate of Incorporation or Bylaws; and
(d) the officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving
Corporation until the earlier of (i) their death,
resignation or removal or (ii) such time as their
respective successors are duly appointed as provided in the
Certificate of Incorporation or Bylaws.
Section
2.5
Effect
of Merger on Capital Stock.
At the Effective
Time, by virtue of the Merger and without any action on the part
of Merger Sub, the Company or the holders of any equity
interests of the Company or Merger Sub, as applicable:
(a) each share of Merger Sub Common Stock that is issued
and outstanding immediately prior to the Effective Time shall be
converted into and become one (1) share of common stock,
par value $0.01 per share, of the Surviving Corporation;
(b) subject to
Section 2.6
:
(i) each share of Common Stock that is issued and
outstanding immediately prior to the Effective Time (other than
shares of Common Stock (A) held by Merger Sub or
(B) held by the Company in treasury (collectively,
Excluded Shares
)) will be converted into the
right to receive $25.00 in cash, without interest (the
Merger Consideration
), and, when so
converted, will automatically be canceled and will cease to
exist;
(ii) each Excluded Share will automatically be canceled and
will cease to exist; and
(iii) each share of series A preferred stock, par
value $0.01 per share, of the Company will automatically be
canceled and will cease to exist.
Section
2.6
Dissenting
Shares.
(a) Notwithstanding anything in this Agreement to the
contrary, shares of Common Stock outstanding immediately prior
to the Effective Time and held by a holder who has demanded and
perfected such holders right to appraisal of such shares
in accordance with Section 262 of the DGCL (the
Dissenting Shares
) will not be converted into
or represent the right to receive the Merger Consideration, but
their holder will instead be entitled to such rights as are
afforded under the DGCL with respect to Dissenting Shares,
unless such holder fails to perfect or withdraws or otherwise
loses its right to appraisal.
(b) If any holder of shares of Common Stock who demands
appraisal of such holders shares pursuant to the DGCL
fails to perfect or withdraws or otherwise loses such
holders right to appraisal, at the later of the Effective
Time or upon the occurrence of such event, such holders
Dissenting Shares will be converted into
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and will represent the right to
receive the Merger Consideration, without interest, in
accordance with
Section 2.5(b)
, and shall no longer
be deemed
Dissenting Shares
hereunder.
(c) The Company shall give Parent:
(i) prompt notice of any written demand for appraisal or
payment of the fair value of any shares of Common Stock,
withdrawals or attempted withdrawals of such demands, and any
other instruments served pursuant to the DGCL received by the
Company; and
(ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL.
(d) The Company shall not, except with the prior written
consent of Parent, voluntarily make any payment with respect to
any demands for appraisals of Common Stock, offer to settle or
settle any such demands or approve any withdrawal of any such
demands.
Section
2.7
Exchange
of Certificates; Payment for Common Stock
.
(a)
Paying Agent.
Prior to the Effective
Time, Parent will appoint a bank or trust company reasonably
acceptable to the Company to act as paying agent (the
Paying Agent
) for the payment of the Merger
Consideration. At or prior to the Effective Time, Parent will
have deposited, or caused to be deposited, with the Paying
Agent, for the benefit of the Public Stockholders, the aggregate
amount of cash payable under
Section 2.5(b)
(the
Exchange Fund
).
(b)
Exchange Procedures
.
(i) Promptly after the Effective Time (but no later than
five (5) Business Days after the Effective Time), the
Paying Agent will mail to each holder of record of a certificate
or certificates, which represented outstanding shares of Common
Stock immediately prior to the Effective Time
(
Certificates
), and to each holder of
uncertificated shares of Common Stock represented by book entry
immediately prior to the Effective Time (
Book-Entry
Shares
), in each case, whose shares were converted
into the right to receive cash pursuant to
Section 2.5(b)
:
(A) a letter of transmittal (which will be in customary
form and reviewed by the Company prior to delivery thereof)
specifying that delivery will be effected, and risk of loss and
title to the Certificates or Book-Entry Shares held by such
Person will pass, only upon delivery of the Certificates or
Book-Entry Shares to the Paying Agent; and
(B) instructions for use in effecting the surrender of the
Certificates or Book-Entry Shares, in exchange for the
applicable Merger Consideration.
(ii) Upon surrender to, and acceptance in accordance with
Section 2.7(b)(iii)
below by, the Paying Agent of a
Certificate or of Book-Entry Shares, the holder will be entitled
to the amount of cash into which the number of Book-Entry Shares
or shares of Common Stock formerly represented by each
Certificate surrendered have been converted under this Agreement.
(iii) The Paying Agent will accept Certificates or Book
Entry Shares upon compliance with such reasonable terms and
conditions as the Paying Agent may impose to effect an orderly
exchange of the Certificates or Book-Entry Shares in accordance
with normal exchange practices.
(iv) After the Effective Time, no further transfers may be
made on the records of the Company or its transfer agent of
Certificates or Book-Entry Shares and if such Certificates or
Book-Entry Shares are presented to the Company for transfer,
they will be canceled against delivery of the Merger
Consideration allocable to the shares of Common Stock
represented by such Certificates or Book-Entry Shares.
(v) No interest will be paid or accrued for the benefit of
holders of Certificates or Book-Entry Shares on the Merger
Consideration payable in respect of Certificates or Book-Entry
Shares.
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(vi) If any Merger Consideration is to be remitted to a
name other than that in which the surrendered Certificate or
Book-Entry Share is registered, no Merger Consideration may be
paid in exchange for such surrendered Certificate or Book-Entry
Share unless:
(A) the Certificate so surrendered is properly endorsed,
with signature guaranteed, or otherwise in proper form for
transfer;
(B) the Book-Entry Share is properly transferred; and
(C) the Person requesting such payment shall pay any
transfer or other Taxes required by reason of the payment to a
Person other than the registered holder of the Certificate or
Book-Entry Share or establish to the satisfaction of the Paying
Agent that such Tax has been paid or is not payable.
(vii) Until surrendered as contemplated by this
Section 2.7
and at any time after the Effective
Time, each Certificate or Book-Entry Share (other than
Dissenting Shares and Excluded Shares) will be deemed to
represent only the right to receive upon such surrender the
Merger Consideration allocable to such Book-Entry Share or the
shares represented by such Certificate as contemplated by
Section 2.5(b).
(c)
No Further Ownership Rights in Common
Stock.
The Merger Consideration paid upon the
surrender for exchange of Certificates or Book-Entry Shares in
accordance with this
Section 2.7
will be deemed to
have been paid in full satisfaction of all rights pertaining to
the shares of Common Stock represented by such Certificates or
Book-Entry Shares.
(d)
Termination of Exchange Fund.
The
Paying Agent will deliver to the Surviving Corporation any
portion of the Exchange Fund (including any interest and other
income received by the Paying Agent in respect of all such
funds) which remains undistributed to the holders of
Certificates or Book-Entry Shares upon expiry of the period of
six (6) months following the Effective Time. Any holders of
shares of Common Stock prior to the Merger who have not complied
with this
Section 2.7
prior to such time may look
only to the Surviving Corporation for payment of their claim for
Merger Consideration to which such holders may be entitled.
(e)
No Liability.
No Party will be liable
to any Person in respect of any amount from the Exchange Fund
delivered to a public official in accordance with any applicable
abandoned property, escheat or similar Law.
(f)
Lost, Stolen or Destroyed
Certificates.
If any Certificate is lost, stolen
or destroyed, the Paying Agent will issue the Merger
Consideration deliverable in respect of, and in exchange for,
such lost, stolen or destroyed Certificate, as determined in
accordance with this
Section 2.7
, only upon:
(i) the making of an affidavit of such loss, theft or
destruction by the Person claiming such Certificate to be lost,
stolen or destroyed; and
(ii) if required by the Surviving Corporation, the posting
by such Person of a bond in such reasonable amount as the
Surviving Corporation may reasonably require as indemnity
against any claim that may be made against it with respect to
such Certificate; or
(iii) if required by the Surviving Corporation, the
entering into an indemnity agreement by such Person reasonably
satisfactory to the Surviving Corporation to indemnify the
Surviving Corporation against any claim that may be made against
it with respect to such Certificate.
(g)
Withholding Rights.
Purchasers and
the Surviving Corporation may deduct and withhold, or may
instruct the Paying Agent to deduct and withhold, from the
consideration otherwise payable under this Agreement to any
holder of shares of Common Stock such amounts as Purchasers, the
Surviving Corporation or the Paying Agent is required to deduct
and withhold under the Code or any similar provision of state,
local or foreign Tax Law with respect to the making of such
payment. Any amounts so deducted and withheld by Purchasers, the
Surviving Corporation or the Paying Agent will be treated as
having been paid to the holder of the shares of Common Stock in
respect of which such deduction and withholding was made for all
purposes.
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Section
2.8
Deferred
Stock Accounts.
At the Effective Time, each
notional stock account with respect to Common Stock under the
Companys deferred compensation plan shall be adjusted
pursuant to the terms of the plan such that the account ceases
to represent a notional investment in shares of Common Stock and
shall be converted into a notional cash account equal to the
product of (x) the number of shares of Common Stock subject
to such stock account multiplied by (y) the Merger
Consideration.
Section
2.9
Adjustments
to Merger Consideration
. In the event that,
between the date of this Agreement and the Effective Time, the
number of issued and outstanding shares of Common Stock or
securities convertible or exchangeable into or exercisable for
shares of Common Stock changes as a result of a
reclassification, stock split (including a reverse stock split),
stock dividend or distribution, recapitalization, merger, issuer
tender or exchange offer, or other similar transaction, the per
share Merger Consideration shall be equitably adjusted to
reflect such change; provided that nothing in the foregoing
shall permit the Company to take any action which is otherwise
prohibited by the terms of this Agreement.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except (a) as set forth in (i) the corresponding
sections of the disclosure letter delivered by the Company to
Parent before the execution of this Agreement (the
Company Disclosure Schedule
) (it being agreed
that disclosure of any item in any section of the Company
Disclosure Schedule shall be deemed to be disclosed with respect
to any other section of the Company Disclosure Schedule to the
extent that the relevance of such item to such other section is
or reasonably should be apparent to the Purchasers or any Dual
Employee) or (ii) the SEC Documents filed at least two
(2) Business Days prior to the date of this Agreement
(excluding, in each case, any disclosures set forth in any risk
factor section or in any other section to the extent they are
forward-looking statements or cautionary, predictive or
forward-looking in nature), or (b) as any Dual Employee
otherwise has Knowledge of as of the date hereof, the Company
hereby represents and warrants to the Purchasers as follows:
Section
3.1
Organization
and Qualification
.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the Laws of Delaware and has
all the requisite corporate power and authority to carry on its
business as now being conducted and to own, lease, use and
operate the properties owned and used by it. Except as would not
have a Material Adverse Effect, each Company Subsidiary is
validly existing and in good standing under the laws of its
jurisdiction of organization and has the requisite power and
authority to own, lease and operate its assets and properties
and to carry on its business as now conducted.
(b) The Company and the Company Subsidiaries are qualified
and in good standing to do business in each jurisdiction in
which the nature of its business requires it to be so qualified,
except to the extent the failure to be so qualified would not
have a Material Adverse Effect.
Section
3.2
Capitalization
.
(a) As of the date of this Agreement, the authorized
capital stock of the Company consists of
(i) 250,000,000 shares of Common Stock; and
(ii) 250,020,000 shares of preferred stock, par value
$.01 per share. As of June 30, 2011, there were
19,333,931 shares of Common Stock issued and outstanding,
4,541,900 shares of Common Stock held in treasury, and
20,000 shares of series A preferred stock held in
treasury. All of the issued and outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully
paid and non-assessable. No restricted shares of Common Stock
have been granted by the Company other than such shares that
have vested prior to the date hereof.
(b) There are no outstanding options, warrants or other
rights of any kind (including preemptive rights) issued or
granted by the Company to acquire from the Company any
additional shares of capital stock of the Company or securities
convertible into or exchangeable for, or which otherwise confer
on the holder thereof any right to acquire, any such additional
shares from the Company, nor is the Company committed to issue
any such option, warrant, right or security.
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(c) The Company does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have
the right to vote (or which are convertible into or exercisable
for securities having the right to vote) with the stockholders
of the Company on any matter.
Section
3.3
Subsidiaries.
Section 3.3(a)
of the Company Disclosure Schedule sets forth a complete and
accurate list of all Subsidiaries of the Company as of the date
hereof (the
Company Subsidiaries
). Except for
the Company Subsidiaries, the Company does not own, directly or
indirectly, any capital stock, voting securities, partnership
interests or equity securities of any Person. Except as set
forth in Section 3.3(b) of the Company Disclosure Schedule,
all of the outstanding shares of capital stock or other equity
interests of each of the Companys Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and
owned free and clear of any Lien.
Section
3.4
Authorization;
Approval and Fairness
.
(a) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order
to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated by
this Agreement, including the Merger, subject only to adoption
of this Agreement by the affirmative vote of (i) at least a
majority of all outstanding shares of Common Stock and
(ii) at least a majority of all outstanding shares of
Common Stock held by the Public Stockholders, in each case,
entitled to vote on such matter at a meeting of stockholders
duly called and held for such purpose (together, the
Required Stockholder Vote
).
(b) This Agreement has been duly executed and delivered by
the Company and, assuming the due authorization, execution and
delivery of this Agreement by Purchasers, constitutes the valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting
creditors rights generally or by general equitable
principles.
(c) On or prior to the date of this Agreement, the Special
Committee and the Company Board (upon the recommendation of the
Special Committee) have (i) approved the terms of this
Agreement and the Merger, (ii) determined that the Merger
is fair to and in the best interest of the Company and the
Public Stockholders, and (iii) resolved to recommend that
the stockholders of the Company approve the adoption of this
Agreement and the Merger (the
Company
Recommendation
).
(d) The Special Committee has received an opinion of
Evercore Group L.L.C. to the effect that, as of the date of such
opinion, the Merger Consideration is fair, from a financial
point of view, to the Public Stockholders.
Section
3.5
Consents
.
(a) Assuming that the consents, approvals, qualifications,
orders, authorizations and filings referred to in
Section 3.5(b)
have been made or obtained, the
execution, delivery and performance by the Company of this
Agreement will not (with or without notice or lapse of time)
result in any violation of or be in conflict with, or result in
a breach of, or constitute a default (or trigger or accelerate
loss of rights or benefits or accelerate performance or
obligations required) under:
(i) any provision of the Companys or any of the
Company Subsidiaries certificate of incorporation or
bylaws (or comparable organizational documents);
(ii) any Law or Judgment to which the Company or any of the
Company Subsidiaries or their respective properties is subject
or bound, except for such violations, conflicts, breaches or
defaults that would not, together with all such other
violations, conflicts, breaches and defaults, have a Material
Adverse Effect or reasonably be expected to prevent or
materially delay the consummation of the transactions
contemplated by this Agreement; or
(iii) any Contract to which the Company or any of the
Company Subsidiaries is a party or by which the Company or any
of the Company Subsidiaries or their respective properties is
bound, or result in the creation of any Lien upon any of the
properties or assets of any the Company or any of the Company
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Subsidiaries, except for such
violations, conflicts, breaches, defaults or Liens that would
not, together with all such other violations, conflicts,
breaches, defaults and Liens, have a Material Adverse Effect or
reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
(b) No consent, approval, qualification, order or
authorization of, or filing with, any Governmental Entity is
required in connection with the Companys valid execution,
delivery or performance of this Agreement, or the consummation
of any other transaction contemplated on the part of the Company
under this Agreement, except (i) in connection, or in
compliance, with the Securities Act and the Exchange Act,
(ii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate
related documents with the relevant authorities of other states
in which the Company is qualified to do business, (iii) the
filings required under, and compliance with other applicable
requirements of, the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR
Act
), and (iv) approvals, qualifications, orders,
authorizations, or filings, in each case, the failure to obtain
which would not have a Material Adverse Effect on the Company or
reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
Section
3.6
Brokers
and Finders.
Other than Evercore Group L.L.C.,
the Company has not employed any broker, finder, advisor or
intermediary in connection with the transactions contemplated by
this Agreement that would be entitled to a brokers,
finders or similar fee or commission in connection with or
upon the consummation of the transactions contemplated by this
Agreement. The Company has disclosed to Parent all amounts
payable to Evercore Group L.L.C.
Section
3.7
Proxy
Statement;
Schedule 13E-3.
(a) None of the information to be supplied by the Company
for inclusion in the Proxy Statement or the
Schedule 13E-3
will (i) in the case of the
Schedule 13E-3
(or any amendment thereof or supplement thereto), as of the date
of filing and as of the date of the Company Stockholders
Meeting and (ii) in the case of the Proxy Statement (or any
amendment thereof or supplement thereto), as of the date of
filing or mailing to the Companys stockholders and as of
the date of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) Each of the Proxy Statement and the
Schedule 13E-3
will, as of its first date of use, comply as to form in all
material respects with the provisions of the Exchange Act.
Section
3.8
SEC
Documents; Financial Statements; Sarbanes-Oxley
.
(a) The Company has filed with the SEC all reports,
schedules, forms, statements, amendments, supplements and other
documents required to be filed with the SEC since
January 1, 2009, together with all certifications required
pursuant to the Sarbanes-Oxley Act of 2002 (these documents, and
together with all information incorporated by reference therein
and exhibits thereto, the
SEC Documents
).
(b) As of the respective dates that they were filed, the
SEC Documents complied in all material respects with all
applicable requirements of the Securities Act and the Exchange
Act, as the case may be. None of the SEC Documents, at the time
filed, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated in or
necessary in order to make the statements in the SEC Documents,
in light of the circumstances under which they were made, not
misleading. As of the date of this Agreement, there are no
outstanding or unresolved comments received from the SEC staff
with respect to the SEC Documents. To the Knowledge of the
Company, as of the date hereof, none of the SEC Documents is the
subject of ongoing SEC formal, informal or voluntary review or
investigation.
(c) The financial statements of the Company included in the
SEC Documents (i) comply in all material respects with
applicable accounting requirements and the applicable published
rules and regulations of the SEC, (ii) have been prepared
in accordance with GAAP (except, in the case of unaudited
statements, as permitted by applicable instructions or
regulations of the SEC relating to the preparation of quarterly
reports on
Form 10-Q)
applied on a consistent basis during the period involved (except
as may be indicated in the
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notes to the financial
statements), and (iii) fairly present in all material
respects the consolidated financial position of the Company as
of the respective dates and the Companys consolidated
results of operations and cash flows for the periods then ended
except as otherwise noted therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(d) The Company maintains disclosure controls and
procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
of
the Exchange Act) required in order for the Chief Executive
Officer and Chief Financial Officer of the Company to engage in
the review and evaluation process mandated by Section 302
of the
Sarbanes-Oxley
Act of 2002. The Companys disclosure controls and
procedures are reasonably designed to ensure that
information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that
all such information is accumulated and communicated to the
Companys management as appropriate to allow timely
decisions regarding required disclosure. The Company is not a
party to any
off-balance
sheet arrangements (as defined in Item 303(c) of
Regulation S-K
promulgated under the Exchange Act).
Section
3.9
Absence
of Certain Changes or Events.
(a) Since December 31, 2010, the Company and the
Company Subsidiaries have conducted their respective businesses
only in the ordinary course of such businesses.
(b) From December 31, 2010 through the date of this
Agreement there has not been any Material Adverse Effect.
Section
3.10
No
Undisclosed Liabilities
. Neither the Company nor
any of the Company Subsidiaries has any Liabilities of any kind
whatsoever (whether accrued, contingent, absolute or otherwise,
whether known or unknown), except Liabilities:
(a) reflected, reserved for or disclosed in the
Companys balance sheet as of December 31, 2010
included in the SEC Documents filed by the Company;
(b) incurred after December 31, 2010 in the ordinary
course of business consistent with past practice; or
(c) that would not have a Material Adverse Effect.
Section
3.11
Compliance
with Laws
. Each of the Company and each of the
Company Subsidiaries is in compliance with and has not been
given notice of any violation of, any applicable Law, rule,
regulation, judgment, injunction, order or decree of any
Governmental Entity applicable to the Company or the Company
Subsidiaries, except for such violations as would not have a
Material Adverse Effect.
Section
3.12
Legal
Proceedings
. Neither the Company nor any of the
Company Subsidiaries is subject to any continuing Judgment with
any Governmental Entity, and there is no claim, action, suit,
litigation, proceeding, or arbitration pending or, to the
Knowledge of the Company, threatened, except for matters which
would not have a Material Adverse Effect.
Section
3.13
Intellectual
Property.
(a) Except as would not have a Material Adverse Effect,
(i) the Company and the Company Subsidiaries have
sufficient rights to use all Intellectual Property that is used
in their respective businesses as conducted on the date of this
Agreement (the
Company IP
) free and clear of
all Liens and (ii) all of the registrations and
applications included in the Company IP owned by the Company or
any of the Company Subsidiaries are subsisting.
(b) Except as would not have a Material Adverse Effect,
neither the conduct of the business of the Company nor the
conduct of the business of any of the Company Subsidiaries nor
the ownership or use of the Company IP infringes or otherwise
violates any Intellectual Property rights of any third party.
(c) For purposes of this Agreement:
Intellectual
Property
means all foreign and domestic
(i) trademarks, service marks, brand names, corporate
names, Internet domain names, logos, symbols, trade dress, trade
names, and all other source indicators and all goodwill
associated therewith and symbolized thereby; (ii) patents
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and proprietary inventions and
discoveries; (iii) confidential and proprietary
information, trade secrets and know-how; (iv) copyrights,
Software and works of authorship in any media; (v) all
other intellectual property rights; and (vi) all
applications and registrations, invention disclosures, and
extensions, revisions, restorations, substitutions,
modifications, renewals, divisions, continuations,
continuations-in-part,
reissues and re-examinations related to any of the foregoing;
and
Software
means any and all
(A) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether
in source code or object code, and (B) databases and
compilations, including any and all data and collections of
data, whether machine readable or otherwise.
Section
3.14
Contracts
. Each
Contract (or group of related Contracts) that is material to the
Company and the Company Subsidiaries taken as a whole (a
Material Contract
) is valid and binding on
the Company or the Company Subsidiaries, as the case may be,
and, to the Knowledge of the Company, each other party thereto,
and is in full force and effect, except for such failures to be
valid and binding or to be in full force and effect as would not
have a Material Adverse Effect. There is no breach or default
under any Material Contracts by the Company or the Company
Subsidiaries and no event has occurred that, with the lapse of
time or the giving of notice or both, would constitute a breach
or default thereunder by the Company or the Company
Subsidiaries, in each case except as would not have a Material
Adverse Effect.
Section
3.15
Takeover
Statutes
. No business combination,
fair price, moratorium, control
share acquisition or other similar anti-takeover statute
or regulation (including Section 203 of the DGCL) is
applicable to this Agreement, the Merger or the other
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS
Purchasers hereby represent and warrant to the Company as
follows:
Section 4.1
Organization and
Qualification
. Each of Parent and Merger Sub is
duly organized, and is validly existing and in good standing
under the laws of Delaware. Merger Sub has been formed solely
for the purpose of merging with and into the Company and taking
action incident to the Merger. Except for Liabilities and
activities contemplated by this Agreement or the Equity
Contribution, Merger Sub has not incurred any obligations or
Liabilities or engaged in any business activities of any kind
prior to the Closing. All issued and outstanding shares of
Merger Sub Common Stock are and will remain beneficially owned
by M&F prior to the Closing.
Section
4.2
Authorization.
(a) Parent has all requisite limited liability company
power and authority and has taken all limited liability company
action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the
transactions contemplated by this Agreement. Merger Sub has all
requisite corporate power and authority and has taken all
corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and to consummate
the transactions contemplated by this Agreement, including the
Merger.
(b) This Agreement has been duly executed and delivered by
Purchasers and, assuming the due authorization, execution and
delivery of this Agreement by the Company, constitutes the valid
and binding obligation of Purchasers, enforceable against
Purchasers in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or similar laws affecting
creditors rights generally or by general equitable
principles.
(c) Immediately following the execution of this Agreement
by the parties hereto, Parent, in its capacity as the sole
stockholder of Merger Sub, will approve this Agreement.
Section
4.3
Consents.
(a) Assuming that the consents, approvals, qualifications,
orders, authorizations and filings referred to in
Section 4.3(b)
have been made or obtained, the
execution, delivery and performance by Purchasers of this
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Agreement will not (with or
without notice or lapse of time) result in any violation of or
be in conflict with, or result in a breach of, or constitute a
default (or trigger or accelerate loss of rights or benefits or
accelerate performance or obligations required) under:
(i) any provision of the organizational documents of Parent
or Merger Sub; or
(ii) any Law or Judgment to which Parent or Merger Sub or
their respective properties is subject or bound, except for such
violations, conflicts, breaches or defaults that would not,
together with all such other violations, conflicts, breaches and
defaults, reasonably be expected to prevent or materially delay
the consummation of the transactions contemplated by this
Agreement.
(b) No consent, approval, qualification, order or
authorization of, or filing with, any Governmental Entity is
required in connection with the valid execution, delivery or
performance of this Agreement by Parent or Merger Sub, or the
consummation of any other transaction contemplated on the part
of Parent or Merger Sub under this Agreement, except (i) in
connection, or in compliance, with the Securities Act and the
Exchange Act, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware,
(iii) the filings required under, and compliance with other
applicable requirements of, the HSR Act and (iv) approvals,
qualifications, orders, authorizations, or filings, in each case
the failure to obtain which would not reasonably be expected to
prevent or materially delay Purchaser or Merger Subs ability to
consummate the transactions contemplated by this Agreement.
Section
4.4
Financing
. Merger
Sub will have access to sufficient funds to pay the aggregate
Merger Consideration and other amounts payable pursuant to this
Agreement at the Effective Time, including all fees and expenses
incurred in connection with the transactions contemplated hereby.
Section
4.5
Brokers
and Finders
. Other than Moelis &
Company, Purchasers have not employed any broker, finder,
advisor or intermediary in connection with the transactions
contemplated by this Agreement that would be entitled to a
brokers, finders, or similar fee or commission in
connection with or upon the consummation of the transactions
contemplated by this Agreement.
Section
4.6
Proxy
Statement;
Schedule 13E-3
. None
of the information to be supplied by the Purchasers for
inclusion in the Proxy Statement or the
Schedule 13E-3
will (i) in the case of the
Schedule 13E-3
(or any amendment thereof or supplement thereto), as of the date
of filing and as of the date of the Company Stockholders
Meeting and (ii) in the case of the Proxy Statement (or any
amendment thereof or supplement thereto), as of the date of
filing or mailing to the Companys stockholders and as of
the date of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein with respect to information
provided by Purchasers, in light of the circumstances under
which they are made, not misleading.
Section
4.7
Solvency
of Parent and the Surviving
Corporation
. Immediately following the Effective
Time and after giving effect to the Merger and taking into
account the financing and related transaction costs necessary to
consummate the Merger, Parent, the Surviving Corporation and
each of its Subsidiaries will not (i) be insolvent (either
because their respective financial conditions are such that the
sum of their debts is greater than the fair market value of
their assets or because the fair saleable value of their assets
is less than the amount required to pay their probable liability
on their existing debts as such debts mature); (ii) have
unreasonably small capital with which to engage in the business
of the Company as conducted immediately prior to the
consummation of the Merger; or (iii) have incurred debts
beyond their ability to pay such debts as such debts become due,
taking into account the timing of and amounts of cash to be
received by them and the timing of and amounts of cash to be
payable on or in respect of their respective indebtedness, in
each case after giving effect to the transactions contemplated
by this Agreement.
Section
4.8
Ownership
of Shares
. Merger Sub and the Contributing
Stockholders collectively own 8,394,000 shares of Common
Stock as of the date hereof and, immediately after the Equity
Contribution, Merger Sub will own at least 8,394,000 shares
of Common Stock. Except as set forth herein, none of M&F or
its Subsidiaries owns (directly or indirectly, beneficially or
of record) any shares of capital stock of the Company or holds
any rights to acquire or vote any shares of capital stock of the
Company except pursuant to this Agreement.
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Section
4.9
No
Other Representations or Warranties
. Except for
the representations and warranties contained in
Article III, each of the Purchasers acknowledges that
(i) neither the Company nor any other Person on behalf of
the Company makes any express or implied representation or
warranty to the Purchasers and (ii) neither the Company nor
any other Person acting on behalf of the Company will have or be
subject to any liability to the Purchasers or any of their
Affiliates or their respective directors, officers or employees
resulting from the distribution to any Purchaser, or any
Purchasers use of, any information, documents,
projections, forecasts or other material available or made
available to the Purchasers.
ARTICLE V
CERTAIN
COVENANTS AND AGREEMENTS
Section
5.1
Certain
Actions Pending Merger
. Except as required by
applicable Law, as set forth in Section 5.1 of the Company
Disclosure Schedule, or as expressly contemplated by this
Agreement, the Company covenants and agrees as to itself and the
Company Subsidiaries that, after the date of this Agreement and
prior to the Effective Time, the business of it and the Company
Subsidiaries shall be conducted in all material respects in the
ordinary and usual course consistent with past practice and, to
the extent consistent therewith, the Company and Company
Subsidiaries shall use their respective reasonable best efforts
to preserve their business organizations intact and maintain
existing relations and goodwill with Governmental Entities,
customers, suppliers, licensors, licensees, distributors,
creditors, lessors, employees and business associates and keep
available the services of its and its Subsidiaries present
employees and agents. Without limiting the generality of the
foregoing, except as required by applicable Law, as set forth in
Section 5.1 of the Company Disclosure Schedule, or as
expressly contemplated by this Agreement, the Company covenants
and agrees as to itself and the Company Subsidiaries that, after
the date of this Agreement and prior to the Effective Time, the
Company, other than with respect to actions taken by or at the
direction of any Dual Employee, shall not, and shall cause the
Company Subsidiaries not to, without the prior written consent
of Parent (not to be unreasonably withheld or delayed):
(a) (i) adjust, split, combine or reclassify any of its
capital stock or other equity interests or (ii) set any
record dates or payment dates for the payment of any dividends
or distributions on its capital stocks, or make, declare, set
aside or pay any dividends on or make any other distribution in
respect of any of its capital stock, other than, in each case,
any such dividends or distributions from any Company Subsidiary
to the Company or any other Company Subsidiary;
(b) issue, deliver, pledge, encumber, sell or purchase any
shares of its capital stock or other equity interests, or
rights, warrants or options to acquire, any such shares of
capital stock or other equity interests, or propose to do any of
the foregoing;
(c) amend its certificate of incorporation, bylaws or other
organizational documents in any manner;
(d) merge or consolidate with any other Person, or acquire
any assets or capital stock of any other Person, other than
acquisitions of assets in the ordinary course of business
consistent with past practice;
(e) (i) incur any long-term indebtedness for money
borrowed or guarantee any such indebtedness of another Person in
excess of $5,000,000, other than in the ordinary course of
business, or (ii) make, or commit to make, any individual
capital expenditures in excess of $2,500,000, other than in the
ordinary course of business;
(f) except as may be required by changes in applicable Law
or GAAP, change any method, practice or principle of accounting;
(g) enter into any new employment agreements with, or
increase the compensation of, any officer or director of the
Company or any Company Subsidiary (including entering into any
bonus, severance, change of control, termination,
reduction-in-force
or consulting agreement or other employee benefits arrangement
or agreement pursuant to which such person has the right to any
form of compensation from the Company or such Company
Subsidiary), other than as required by Law or by written
agreements in effect on or prior to the date of this Agreement
with such person, or otherwise amend in any material respect any
existing agreements
A-14
with any such person or use its
discretion to amend any Benefit Plan or accelerate the vesting
or any payment under any Benefit Plan, other than in the
ordinary course of business;
(h) settle or otherwise compromise any material litigation,
arbitration or other judicial or administrative dispute or
proceeding relating to (i) the Company or the Company
Subsidiaries other than in the ordinary course of business, or
(ii) the Merger or the transactions contemplated by this
Agreement;
(i) sell, transfer, lease, mortgage, encumber or otherwise
dispose of any of its material properties or assets to any
Person, except (i) in the ordinary course of business
consistent with past practice, (ii) pursuant to an
agreement in effect on the date of this Agreement, or
(iii) dispositions of obsolete assets;
(j) make an investment in, or loan to, any Person, except
the Company or the Company Subsidiaries, other than in the
ordinary course of business;
(k) enter into, terminate or amend any Material Contract
other than in the ordinary course of business;
(l) except in the ordinary course of business, make or
change any material election concerning Taxes or Tax Returns,
file any material amended Tax Return, enter into any material
closing agreement with respect to Taxes, settle any material Tax
claim or assessment or surrender any right to claim a material
refund of Taxes or obtain any Tax ruling; or
(m) enter into any agreement to, or the making of any
commitment to, take any of the actions prohibited by this
Section 5.1.
Section
5.2
Proxy
Statement.
(a) The Company shall (i) as promptly as reasonably
practicable after the date of this Agreement, prepare and file
with the SEC a proxy statement relating to the Company
Stockholders Meeting (together with any amendments thereof
or supplements thereto and any other required proxy materials,
the
Proxy Statement
), (ii) respond as
promptly as reasonably practicable to any comments received from
the staff of the SEC with respect to such filings, (iii) as
promptly as reasonably practicable prepare and file any
amendments or supplements necessary to be filed in response to
any such comments and (iv) use its reasonable best efforts
to have cleared by the staff of the SEC the Proxy Statement and
thereafter mail to its stockholders as promptly as reasonably
practicable such Proxy Statement, and (v) to the extent
required by applicable Law, as promptly as reasonably
practicable, file and mail to the Company stockholders any
supplement or amendment to the Proxy Statement. The Company
shall promptly notify Parent upon the receipt of any comments
(written or oral) from the SEC or its staff or any request from
the SEC or its staff for amendments or supplements to the Proxy
Statement, shall consult with Parent and provide Parent with the
opportunity to review and comment on any response to such
comments or requests prior to responding to any such comments or
request, and shall provide Parent with copies of all
correspondence between the Company and its Representatives, on
the one hand, and the SEC and its staff, on the other hand.
Parent shall cooperate with the Company in connection with the
preparation and filing of the Proxy Statement, including
promptly furnishing the Company upon request with any and all
information as may be required to be set forth in the Proxy
Statement under the Exchange Act. The Company will provide
Parent a reasonable opportunity to review and comment upon the
Proxy Statement, or any amendments or supplements thereto, prior
to filing the same with the SEC.
(b) The Company and Parent shall cooperate to
(i) concurrently with the preparation and filing of the
Proxy Statement, jointly prepare and file with the SEC a
Rule 13E-3
Transaction Statement on
Schedule 13E-3
(together with any amendments thereof or supplements thereto,
the
Schedule 13E-3
)
relating to the transactions contemplated by this Agreement, and
furnish to each other all information concerning such party as
may be reasonably requested in connection with the preparation
of the
Schedule 13E-3,
(ii) respond as promptly as reasonably practicable to any
comments received from the staff of the SEC with respect to such
filings and will consult with each other prior to providing such
response, (iii) as promptly as reasonably practicable after
consulting with each other, prepare and file any amendments or
supplements necessary to be filed in response to any such
comments, (iv) use reasonable best efforts to have cleared
by the SEC the
Schedule 13E-3
and (v) to the extent required by applicable Law, as
promptly as reasonably practicable, prepare and file any
supplement or amendment to the
Schedule 13E-3.
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(c) If, at any time prior to the Company Stockholders
Meeting any information relating to the Company or Parent or any
of their respective Affiliates should be discovered by the
Company or Parent which should be set forth in an amendment or
supplement to the Proxy Statement or
Schedule 13E-3,
as applicable, so that the Proxy Statement or
Schedule 13E-3,
as applicable, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading, the party that discovers such information
shall promptly notify the other party and, to the extent
required by applicable Law, the Company (or the Company and
Parent jointly, in the case of the
Schedule 13E-E)
shall disseminate an appropriate amendment thereof or supplement
thereto describing such information to the Companys
stockholders.
(d) Subject to
Section 5.4
, the Company
Recommendation shall be included in the Proxy Statement and the
Schedule 13E-3.
Section
5.3
Stockholders
Meeting.
(a) The Company will call and hold a meeting of the
stockholders of the Company for the purpose of voting upon the
adoption and approval of this Agreement and the transactions
contemplated by this Agreement (such meeting, the
Company Stockholders Meeting
). The
Company Stockholders Meeting will be held (on a date
selected by the Company in consultation with Parent) as promptly
as practicable (but no later than 40 days) after the
mailing of the Proxy Statement to the stockholders of the
Company subject to any reasonable delay required by the need to
supplement or amend the Proxy Statement. M&F shall cause to
be voted all shares of Common Stock beneficially owned by it in
favor of the adoption and approval of this Agreement and the
transactions contemplated by this Agreement.
Section
5.4
No
Solicitation; No Adverse Company Recommendation.
(a) Except as expressly permitted by this
Section 5.4
, neither the Company nor any of the
Company Subsidiaries nor any of their respective officers,
directors, employees, investment bankers, attorneys, accountants
and other advisors or representatives (such officers, directors,
employees, investment bankers, attorneys, accountants and other
advisors or representatives, collectively,
Representatives
) shall, directly or
indirectly:
(i) initiate, solicit, or knowingly encourage, induce or
assist any inquiries or the making, submission or announcement
of any proposal or offer that constitutes, or could reasonably
be expected to lead to, any Acquisition Proposal;
(ii) execute or enter into any Contract with respect to an
Acquisition Proposal (other than an Acceptable Confidentiality
Agreement pursuant to the terms and conditions of
Section 5.4(b)
);
(iii) engage in, continue or otherwise participate in any
discussions or negotiations regarding, or provide or furnish any
non-public information or data relating to the Company or any of
the Company Subsidiaries or afford access to the business,
properties, assets, books, records or personnel of the Company
or any of the Company Subsidiaries to any Person (other than
Parent, Merger Sub, or any of their respective Affiliates,
designees or Representatives) with the intent to initiate,
solicit, encourage, induce or assist the making, submission or
commencement of any proposal or offer that constitutes, or could
reasonably be expected to lead to, any Acquisition
Proposal; or
(iv) otherwise knowingly facilitate any effort or attempt
to make an Acquisition Proposal.
(b) Notwithstanding
Section 5.4(a)
, from the
date hereof until the date that the Required Stockholder Vote
has been obtained, following the receipt by the Company of an
unsolicited
bona fide
written Acquisition Proposal,
(i) the Company Board and the Special Committee shall be
permitted to participate in discussions regarding such
Acquisition Proposal solely to clarify the terms of such
Acquisition Proposal and (ii) if the Company Board
determines in good faith (A) that such Acquisition Proposal
constitutes or could reasonably be expected to lead to a
Superior Proposal and (B) after consultation with outside
legal counsel, that the failure to take the actions set forth in
clauses (x) and (y) below with respect to such
Acquisition Proposal would be inconsistent with its fiduciary
duties, then the Company may, in response to such Acquisition
Proposal, (x) furnish access and non-public information
with respect to the Company and of the Company
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Subsidiaries to the Person who has
made such Acquisition Proposal pursuant to an Acceptable
Confidentiality Agreement and (y) participate in
discussions and negotiations regarding such Acquisition Proposal.
(c) The Company shall promptly (and, in any event, within
24 hours) notify Parent if any inquiries, proposals or
offers with respect to an Acquisition Proposal are received by,
any such information is requested from, or any such discussions
or negotiation are sought to be initiated or continued with, it
or any of its Representatives indicating, in connection with
such notice, the name of such Person and the material terms and
conditions of any proposals or offers (including, if applicable,
copies of any written requests, proposals or offers, including
proposed agreements) and thereafter shall keep Parent informed,
on a current basis, of the status and terms of any such
proposals or offers (including any amendments thereto) and the
status of any such discussions or negotiations, including any
change in the Companys intentions as previously notified.
(d) Except as set forth in
Section 5.4(e)
and
Section 5.4(f)
, the Company Board or any committee
thereof shall not (i) withdraw, modify or amend the Company
Recommendation in any manner adverse to Parent,
(ii) approve, endorse or recommend an Acquisition Proposal
or (iii) at any time following receipt of an Acquisition
Proposal, fail to reaffirm its approval or recommendation of
this Agreement and the Merger as promptly as practicable (but in
any event within five (5) business days after receipt of
any reasonable written request to do so from Parent) (any of the
above, an
Adverse Company Recommendation
).
(e) Notwithstanding the foregoing, the Company Board may,
at any time before obtaining the Required Stockholder Vote, to
the extent it determines in good faith, after consultation with
outside legal counsel, that failure to take such action would be
inconsistent with its fiduciary duties, in response to a
Superior Proposal received by the Company Board after the date
of this Agreement, make an Adverse Company Recommendation, but
only if:
(i) the Company shall have first provided Parent prior
written notice, at least three (3) Business Days in
advance, that it intends to make such Adverse Company
Recommendation and is prepared to terminate this Agreement to
enter into a Contract with respect to a Superior Proposal, which
notice shall include the material terms and conditions of the
transaction that constitutes such Superior Proposal, the
identity of the party making such Superior Proposal, and copies
of any Contracts that are proposed to be entered into with
respect to such Superior Proposal; and
(ii) during the three (3) Business Days after the
receipt of such notice (it being understood and agreed that any
material change to the financial or other terms and conditions
of such Superior Proposal shall require an additional notice to
Parent of a two (2) Business Day period which may, in whole
or in part, run concurrently with the initial three
(3) Business Day period), the Company shall have, and shall
have caused its Representatives to, negotiate with Parent in
good faith (to the extent Parent desires to negotiate) to make
such adjustments in the terms and conditions of this Agreement
so that there is no longer a basis for such Acquisition Proposal
to constitute a Superior Proposal.
(f) Notwithstanding the foregoing, the Company Board may,
at any time before obtaining the Required Stockholder Vote, to
the extent it determines in good faith, after consultation with
outside legal counsel, that failure to take such action would be
inconsistent with its fiduciary duties, in response to an
Intervening Event, make an Adverse Company Recommendation, but
only if:
(i) the Company shall have first provided Parent prior
written notice, at least three (3) Business Days in
advance, that it intends to make such Adverse Company
Recommendation; and
(ii) during the three (3) Business Days after the
receipt of such notice, the Company shall have, and shall have
caused its Representatives to, negotiate with Parent in good
faith (to the extent Parent desires to negotiate) to make such
adjustments in the terms and conditions of this Agreement so
that there is no longer a basis for such withdrawal,
modification or amendment.
(g) Nothing contained in this
Section 5.4
shall
be deemed to prohibit the Company Board from disclosing to the
stockholders of the Company a position contemplated by
Rules 14d-9
and
14e-2
promulgated under the Exchange Act,
provided
, that if
such disclosure does not reaffirm the Company Recommendation or
has the substantive effect of withdrawing or adversely modifying
the Company Recommendation, such disclosure shall
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be deemed to be an Adverse Company
Recommendation (it being understood that any stop, look or
listen communication that contains only the information
set forth in
Rule 14d-9(f)
shall not be deemed to be an Adverse Company Recommendation).
(h) Any violations of the restrictions set forth in this
Section 5.4
by any Representatives of the Company or
any of its Subsidiaries (other than any such Representatives
that are also Representatives of M&F or its Affiliates)
shall be deemed to be a breach of this
Section 5.4
by the Company.
Section
5.5
Reasonable
Best Efforts.
(a) Upon the terms and subject to the conditions of this
Agreement and in accordance with applicable Law, each Party
shall, and shall cause its Affiliates to, 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 to ensure that the conditions set forth in
Article VI
are satisfied and to consummate the
transactions contemplated by this Agreement as promptly as
practicable. The terms of this
Section 5.5
shall not
limit the rights of the Company set forth in
Section 5.4.
(b) Without limiting the generality of
Section 5.5(a)
, each Party shall (i) use its
reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws and regulations or
required to be taken by any Governmental Entity or otherwise to
consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, (ii) obtain from
any Governmental Entity any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be
obtained or made by any Party, or to avoid an action or
proceeding by any Governmental Entity, in connection with the
authorization, execution and delivery of this Agreement and the
consummation of the Merger, (iii) defend and contest any
lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation
of the transactions contemplated by this Agreement, including
seeking to have any stay or temporary restraining order entered
by any Governmental Entity vacated or reversed, (iv) make,
as promptly as practicable (and in any event within ten
(10) Business Days of the date of this Agreement), an
appropriate filing with the U.S. Federal Trade Commission
and the Antitrust Division of the U.S. Department of
Justice of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated by this
Agreement and (v) make, as promptly as practicable,
appropriate filings under any other applicable antitrust or
anti-competition Law. Notwithstanding the foregoing or any other
provision of this Agreement, the Company shall not, without
Parents prior written consent, commit to any divestiture
transaction or agree to any restriction on its business, and
nothing in this
Section 5.5
shall require Parent,
the Company or their respective Affiliates to offer, accept or
agree to (A) dispose or hold separate any material part of
its or their businesses, operations or assets, (B) not
compete in any geographic area or line of business,
and/or
(C) restrict the manner in which, or whether, Parent, the
Company or any of their respective Affiliates may carry on any
material part of its or their business.
(c) Each Party shall cooperate to obtain all consents,
approvals or waivers from, or take other actions with respect
to, third parties necessary or advisable to be obtained or taken
in connection with the transactions contemplated by this
Agreement.
(d) The Company shall and shall cause the Company
Subsidiaries and their respective Representatives to cooperate,
at Parents cost and expense, with Parent in connection
with its efforts to obtain any financing for Parent or its
Affiliates in connection with consummation of the Merger
(provided that such requested cooperation is consistent with
applicable Law and does not unreasonably interfere with the
operations of the Company and Company Subsidiaries), including
by participating in presentations, meetings or diligence
sessions with prospective lenders and assisting with the
preparation of financial statements and other materials
requested by prospective lenders. Parent shall indemnify,
defend, and hold harmless the Company, the Company Subsidiaries
and their respective Representatives from and against any and
all losses suffered or incurred by them in connection with
(i) any action taken by them at the request of Parent
pursuant to this
Section 5.5(d)
or (ii) any
information utilized in connection with this
Section 5.5(d)
(other than information provided by
the Company or the Company Subsidiaries).
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Section
5.6
Access
. From
the date of this Agreement to the Effective Time, the Company
shall allow Parent and its Representatives reasonable access at
all reasonable times to the personnel, auditors, offices,
records and files, correspondence, audits and properties, as
well as to all information relating to or otherwise pertaining
to the business and affairs, of the Company. No investigation by
Parent or its Representatives pursuant to this Section 5.6,
shall affect any representation or warranty of the Company in
this Agreement.
Section
5.7
Notification
of Certain Matters
. From and after the date of
this Agreement until the Effective Time, each Party shall
promptly notify the other Parties of:
(a) any change or event that would be reasonably likely to
cause any of the conditions in
Article VI
not to be
satisfied or to cause the satisfaction thereof to be materially
delayed; and
(b) any actions, suits, claims, investigations or
proceedings commenced or, to the Knowledge of the Party,
threatened against any Party which seeks to prohibit, prevent or
materially delay consummation of the transactions contemplated
hereby;
(c)
provided
,
however
, that the delivery of
any notice pursuant to this
Section 5.7
shall not be
deemed to be an amendment of this Agreement and shall not cure
any breach of any representation or warranty hereunder.
Section
5.8
Public
Announcements
. None of the Parties or their
respective Affiliates will issue any press release or otherwise
make any public statement with respect to this Agreement and the
transactions contemplated hereby without the prior consent of
the other Party (which consent will not be unreasonably
withheld), except as may be required by applicable Law or stock
exchange regulation. The Parties will consult (to the extent
reasonably practicable if disclosure is required by Law) with
each other before issuing, and provide each other the
opportunity to review and comment upon, any such press release
or other public statement with respect to this Agreement and the
transactions contemplated by this Agreement, whether or not
required by Law.
Section
5.9
Directors
and Officers Indemnification.
(a) The Certificate of Incorporation and the Bylaws will
contain provisions with respect to indemnification, advancement
of expenses and limitation of Liability of directors and
officers set forth in the Companys certificate of
incorporation and bylaws in effect as of the date of this
Agreement. These provisions may not be amended, repealed or
otherwise modified for a period of six (6) years following
the Effective Time in any manner that would adversely affect the
rights of individuals who on or prior to the Effective Time were
directors or officers of the Company (each a
Covered
Person
), unless such modification is required by Law
and then only to the maximum extent required by such applicable
Law.
(b) From the Effective Time through the later of
(i) the sixth anniversary of the date on which the
Effective Time occurs and (ii) the expiration of any
statute of limitations applicable to any claim, action, suit,
proceeding or investigation referred to below, the Surviving
Corporation shall indemnify and hold harmless each Covered
Person against all claims, losses, Liabilities, damages,
judgments, fines, fees, costs or expenses, including reasonable
attorneys fees and disbursements, incurred in connection
with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time (including this Agreement and the
transactions and actions contemplated hereby), whether asserted
or claimed prior to, at or after the Effective Time, to the
fullest extent permitted under applicable Law and as required by
the certificate of incorporation or bylaws of the Company in
effect on the date of this Agreement, including provisions
relating to advancement of expenses incurred in the defense of
any claim, action, suit, proceeding or investigation.
(c) The Surviving Corporation shall provide, for a period
of not less than six (6) years after the Effective Time,
the Covered Persons who are currently covered by the
Companys existing director and officer insurance policy
with an insurance policy (including by arranging for run-off
coverage, if necessary) that provides coverage for events
occurring at or prior to the Effective Time that is no less
favorable than the existing policy so long as the Surviving
Corporation is not required to pay an annual premium in excess
of 300% of the last annual premium paid by the Company for such
insurance before the date of this Agreement (such 300%
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amount being the
Maximum
Premium
). If Surviving Corporation is unable to obtain
the insurance described in the prior sentence for an amount less
than or equal to the Maximum Premium, then the Surviving
Corporation shall instead obtain as much comparable insurance as
possible for an annual premium equal to the Maximum Premium.
Notwithstanding the foregoing, in lieu of the arrangements
contemplated by this
Section 5.9(c)
, Parent shall be
entitled to purchase a tail directors and
officers liability insurance policy covering the matters
described in this
Section 5.9(c)
, and if it so
elects, the obligations under this
Section 5.9(c)
shall be satisfied so long as Purchaser (or the Surviving
Corporation) causes such policy to be maintained in effect for a
period of six years following the Effective Time.
(d) The covenants contained in this
Section 5.9
shall survive the Effective Time, and are intended to be for the
benefit of, and shall be enforceable by, each Covered Person and
their respective heirs and legal representatives and shall not
be deemed exclusive of any other rights to which a Covered
Person is entitled, whether pursuant to Law, Contract or
otherwise.
(e) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or
(ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such
case, proper provision shall be made so that the successors and
assigns of the Surviving Corporation, or at Parents
option, Parent, shall assume the obligations set forth in this
Section 5.9.
Section
5.10
Stockholder
Litigation
. Each of the Parties shall give the
other the reasonable opportunity to participate in the defense
of any stockholder litigation against any Party or their
respective directors and officers, as applicable, relating to
this Agreement and the transactions contemplated hereby. No
settlement that imposes obligations (monetary or otherwise) on
the Company or the Surviving Corporation shall be agreed to
without the prior written consent of Parent.
Section
5.11
Rule 16b-3
. Prior
to the Effective Time, the Company shall take such steps as may
be reasonably requested by any Party hereto to cause
dispositions of Company equity securities pursuant to the
transactions contemplated by this Agreement by each individual
who is a director or officer of the Company to be exempt under
Rule 16b-3
promulgated under the Exchange Act in accordance with that
certain No-Action Letter dated January 12, 1999 issued by
the SEC regarding such matters.
Section
5.12
Knowledge
of Inaccuracies
. Parent shall not have any right
to (a) terminate this Agreement under
Section 7.1(c)(ii) or (b) claim any damage or seek any
other remedy at Law or in equity for any breach of or inaccuracy
in any representation or warranty made by the Company in
Article III to the extent (i) M&F, the Purchasers
or any of their respective Affiliates or (ii) any Dual
Employee had Knowledge of any facts or circumstances that
constitute or give rise to such breach of or inaccuracy in such
representation or warranty as of the date hereof.
ARTICLE VI
CONDITIONS
PRECEDENT
Section
6.1
Conditions
to each Partys Obligation to Effect the
Merger
. The respective obligation of each Party
to effect the Merger is subject to the satisfaction on or prior
to the Closing Date of each of the following conditions, none of
which may be waived:
(a)
No Injunctions or Restraints;
Illegality
. No court or other Governmental Entity
of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger or the
other transactions contemplated by this Agreement.
(b)
Approval of Stockholders
. The
Required Stockholder Vote shall have been obtained.
(c)
Regulatory Approvals
. The waiting
period applicable to the consummation of the Merger under the
HSR Act shall have expired or been earlier terminated.
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Section
6.2
Conditions
to the Obligation of the Company to Effect the
Merger
. The obligation of the Company to effect
the Merger is further subject to the satisfaction or waiver of
each of the following conditions prior to or at the Closing Date:
(a)
Representations and Warranties
. The
representations and warranties of the Purchasers set forth in
this Agreement shall be true and correct in all respects as of
the date hereof and as of the Closing Date, without regard to
any materiality qualifications contained in them, as
though made on and as of such date (except for representations
and warranties made as of a specified date, the accuracy of
which shall be determined as of that specified date), except
where the failure of any such representation or warranty to be
so true and correct would not reasonably be expected to prevent
or materially delay the consummation of the transactions
contemplated by this Agreement.
(b)
Agreements
. Purchasers shall have
performed and complied in all material respects with all its
undertakings and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
(c)
Certificate
. The Company shall have
received a certificate of a senior executive officer of each of
Parent and Merger Sub, dated as of the Closing Date, certifying
that the conditions specified in
Section 6.2(a)
and
Section 6.2(b)
have been fulfilled.
Section
6.3
Conditions
to the Obligation of Purchasers to Effect the
Merger
. The obligation of Purchasers to effect
the Merger is further subject to the satisfaction or waiver of
each of the following conditions prior to or at the Closing Date:
(a)
Representations and Warranties
. The
representations and warranties of the Company set forth in
(i) this Agreement (other than in
Section 3.9(b)
) shall be true and correct in all
respects as of the date hereof and as of the Closing Date,
without regard to any materiality or Material
Adverse Effect qualifications contained in them, as though
made on and as of such date (except for representations and
warranties made as of a specified date, the accuracy of which
shall be determined as of that specified date), except where the
failure of any such representation or warranty to be so true and
correct would not (A) individually or in the aggregate have
a Material Adverse Effect or (B) reasonably be expected to
prevent or materially delay the consummation of the transactions
contemplated by this Agreement and (ii)
Section 3.9(b)
shall be true and correct in all
respects as of the date hereof and as of the Closing Date.
(b)
Agreements
. The Company shall have
performed and complied in all material respects with all of its
undertakings and agreements required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
(c)
Certificate
. Parent and Merger Sub
shall have received a certificate of a senior executive officer
of the Company, dated as of the Closing Date, certifying that
the conditions specified in
Section 6.3(a)
and
Section 6.3(b)
have been fulfilled.
(d)
Material Adverse Effect
. Since the
date of this Agreement, there shall not have occurred any
Material Adverse Effect.
For the avoidance of doubt, the obtaining of financing is not a
condition to the obligations of the Purchasers.
ARTICLE VII
TERMINATION
Section
7.1
Termination
. This
Agreement may be terminated and the Merger may be abandoned as
follows:
(a) At any time prior to the Effective Time, by the mutual
written consent of Parent and the Company.
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(b) By either Parent or the Company, in each case by
written notice to the other, if:
(i) the Merger has not been consummated on or prior to
March 31, 2012; provided that the right to terminate this
Agreement under this
Section 7.1(b)(i)
will not be
available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Merger to occur on or prior to such date;
(ii) an administrative agency or commission or other
governmental authority or instrumentality shall have issued a
final nonappealable injunction, order, decree, judgment or
ruling, permanently enjoining or otherwise prohibiting the
Merger; or
(iii) at the Company Stockholders Meeting or any
adjournment thereof at which this Agreement has been voted upon,
the Company stockholders fail to approve this Agreement by the
Required Stockholder Vote;
provided
that Parent shall not
have the right to terminate this Agreement pursuant to this
Section 7.1(b)(iii)
if the failure to obtain the
Required Stockholder Vote is due to the failure of M&F to
vote the shares of Common Stock beneficially owned by it in
accordance with
Section 5.3(a).
(c) By Parent upon written notice to the Company:
(i) if, at any time prior to adoption of this Agreement by
the Required Stockholder Vote, the Company Board or the Special
Committee shall have effected an Adverse Company
Recommendation; or
(ii) upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in
this Agreement such that (if such breach occurred or was
continuing as of the Closing Date) the conditions set forth in
Section 6.3(a)
or
Section 6.3(b)
would
be incapable of fulfillment and which breach is incapable of
being cured, or is not cured, within 15 days following
receipt of written notice of such breach.
(d) By the Company upon written notice to Parent:
(i) if, at any time prior to adoption of this Agreement by
the Required Stockholder Vote, the Company Board or the Special
Committee shall have effected an Adverse Company Recommendation
as a result of an Intervening Event;
provided
that the
Company has complied with the requirements of
Section 5.4
(including
Section 5.4(f)
);
(ii) if, at any time prior to adoption of this Agreement by
the Required Stockholder Vote, the Company Board or the Special
Committee shall have effected an Adverse Company Recommendation
as a result of a Superior Proposal;
provided
that the
Company has complied with requirements as set forth in
Section 5.4
(including
Section 5.4(e)
); or
(iii) upon a breach of any representation, warranty,
covenant or agreement on the part of Parent or Merger Sub set
forth in this Agreement such that (if such breach occurred or
was continuing as of the Closing Date) the conditions set forth
in
Section 6.2(a)
or
Section 6.2(b)
would be incapable of fulfillment and which breach is incapable
of being cured, or is not cured, within 15 days following
receipt of written notice of such breach.
Section
7.2
Effect
of Termination
. If this Agreement is terminated
as provided in Section 7.1, this Agreement will become null
and void (except that the provisions of Section 7.2,
Section 7.3 and Article VIII will survive any
termination of this Agreement); provided that nothing in this
Agreement will relieve any party from any Liability resulting
from any willful breach of this Agreement or intentional
misconduct.
Section
7.3
Termination
Fee.
(a) The Company will pay, or cause to be paid, to Parent an
amount equal to $8,250,000 (the
Termination
Fee
) if (i) the Company terminates this Agreement
pursuant to
Section 7.1(d)(ii)
, or (ii) Parent
terminates this Agreement pursuant to
Section
7.1(c)(i)
and an Adverse Company Recommendation is made
in connection with the receipt or announcement of an Acquisition
Proposal.
(b) If this Agreement is terminated (i) pursuant to
Section 7.1(b)(iii)
and prior to the date of the
Company Stockholders Meeting an Acquisition Proposal shall
have been made or publicly announced and
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such Acquisition Proposal shall
not have been publicly withdrawn without qualification at least
five (5) Business Days prior to the Company
Stockholders Meeting, (ii) by the Company pursuant to
Section 7.1(d)(i)
or (iii) by Parent pursuant to
Section 7.1(c)(i)
under circumstances in which the
Termination Fee is not payable, the Company will pay, or cause
to be paid, all of Parents, Merger Subs and their
respective Affiliates reasonable
out-of-pocket
fees and expenses (including reasonable legal fees and expenses)
actually incurred by Parent, Merger Sub and their respective
Affiliates on or prior to the termination of this Agreement in
connection with the transactions contemplated by this Agreement;
provided
that in no event shall the amount payable
pursuant to this
Section 7.3(b)
exceed $4,000,000
(the amount payable pursuant to this
Section 7.3(b)
,
Parent Expenses
).
(c) The Company acknowledges that the agreements contained
in
Section 7.3
are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, Purchasers would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the
Termination Fee or Parent Expenses and, in order to obtain such
payment, Parent or Merger Sub commences a suit that results in a
judgment against the Company for the Termination Fee or Parent
Expenses (or a portion of any such fees), the Company shall pay
Parent its costs and expenses (including attorneys fees)
in connection with such suit, together with interest on the
amount of the fee at the prime rate published in the Money Rates
section of The Wall Street Journal in effect on the date such
payment was required to be made.
(d) All payments under this
Section 7.3
shall
be made by wire transfer of immediately available funds to an
account designated in writing by Parent, and shall be made in
the case of, (i) the Termination Fee, within two
(2) Business Days after the termination of this Agreement,
and (ii) Parent Expenses, within two (2) Business Days
of receipt of an invoice from Parent.
(e) In the event that Parent shall have the right to
receive the Termination Fee or Parent Expenses, Parents
right to receive such payment (and the fees and expenses set
forth in
Section 7.3(d)
), if any, shall be the sole
and exclusive remedy (other than with respect to any Liability
resulting from any willful breach of this Agreement or
intentional misconduct by the Company) against the Company and
any of the Companys Subsidiaries or Affiliates for any and
all losses suffered by Parent, Merger Sub, their respective
Affiliates in connection with, or as a result of the failure, of
the transactions contemplated by this Agreement to be
consummated.
ARTICLE VIII
MISCELLANEOUS
Section
8.1
Non-Survival
of Representations and Warranties
. None of the
representations and warranties in this Agreement or in any
instrument delivered under this Agreement will survive the
Effective Time, and none of the Purchasers and the Company,
their respective Affiliates and any of the officers, directors,
employees or stockholders of any of the foregoing, will have any
Liability whatsoever with respect to any such representation or
warranty after such time. This Section 8.1 will not limit
any covenant or agreement of the Parties which by its terms
contemplates performance after the Effective Time.
Section
8.2
Amendment
. This
Agreement may be amended only by an agreement in writing
executed by all of the Parties. After the approval of the
adoption of this Agreement by the stockholders of the Company,
no amendment requiring approval of the stockholders of the
Company and Merger Sub shall be made without first obtaining
such approval.
Section
8.3
Waiver
. At
any time prior to the Effective Time, any of the Parties may:
(a) extend the time for the performance of any of the
obligations or other acts of any of the other Party or Parties,
as the case may be; or
(b) waive compliance with any of the agreements of the
other Party or Parties, as the case may be, or fulfillment of
any conditions (to the extent any such condition may be waived)
to its own obligations under this Agreement.
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Any agreement on the part of a Party to any such extension or
waiver will be valid only if set forth in an instrument in
writing signed on behalf of such Party by a duly authorized
officer.
Section
8.4
Special
Committee Approval
. No amendment or waiver of any
provision of this Agreement and no decision or determination
shall be made, or action taken, by the Company with respect to
this Agreement without first obtaining the approval of the
Special Committee.
Section
8.5
Expenses
. Except
as contemplated by this Agreement, including Section 7.3,
all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated
by this Agreement will be the obligation of the Party incurring
such expenses.
Section
8.6
Guarantee
. M&F
hereby guarantees the performance of the obligations of the
Purchasers under this Agreement. M&F shall cause each of
the Purchasers and the Surviving Corporation, as applicable, to
perform all of their respective agreements, covenants and
obligations under this Agreement, including those to be
performed from and after the Effective Time. This is a guarantee
of payment and performance and not of collectability. M&F
hereby waives diligence, presentment, demand of performance,
filing of any claim, any right to require any proceeding first
against any of the Purchasers or the Surviving Corporation, as
applicable, protest, notice and all demands whatsoever in
connection with the performance of its obligations set forth in
this Section 8.6.
Section 8.7
Actions
by Dual Employees
. For purposes of this
Agreement, including without limitation Sections 5.1 and
5.4, the Company shall not be in breach of this Agreement or
liable in respect of any actions taken by any Dual Employee.
Section
8.8
Applicable
Law; Jurisdiction; Specific Performance.
(a) This Agreement will be governed by the Laws of the
State of Delaware without regard to the conflicts of law
principles thereof. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined in
the Chancery Court of the State of Delaware, and the Parties
hereby irrevocably submit to the exclusive jurisdiction of such
courts (and, in the case of appeals, appropriate appellate
courts therefrom) in any such action or proceeding and
irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding. The consents to
jurisdiction set forth in this paragraph shall not constitute
general consents to service of process in the State of Delaware
and shall have no effect for any purpose except as provided in
this paragraph and shall not be deemed to confer rights on any
Person other than the Parties. The Parties agree that a final
judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable Law.
(b) The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in the Court of Chancery of the
State of Delaware, this being in addition to any other remedy to
which such Party is entitled at law or in equity.
Section
8.9
Notices
. All
notices and other communications under this Agreement must be in
writing and will be deemed to have been duly given or made as
follows: (a) if delivered in person, on the day of such
delivery, (b) if by facsimile, on the day on which such
facsimile was sent; provided, that receipt is personally
confirmed by telephone, (c) if by certified or registered
mail (return receipt requested), on the fifth Business Day after
the mailing thereof or (d) if by reputable overnight
delivery service, on the second Business Day after the sending
thereof.
A-24
If to the Company, to:
M & F Worldwide Corp.
35 East 62nd Street
New York, NY 10065
Attention: Special Committee
Fax:
(212) 572-8435
with a copy to:
Willkie Farr & Gallagher
LLP
787 Seventh Avenue
New York, NY 10019
Attention: Michael A Schwartz, Esq.
Jeffrey
S. Hochman, Esq.
Fax:
(212) 728-8111
If to Parent or Merger Sub, to:
MacAndrews & Forbes
Holdings Inc.
35 East 62nd Street
New York, NY 10065
Attention: General Counsel
Fax:
(212) 572-8439
with a copy to:
Skadden, Arps, Slate,
Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Franklin M. Gittes, Esq.
Alan
C. Myers, Esq.
Fax:
(212) 735-2000
Section
8.10
Entire
Agreement
. This Agreement (including the
documents and instruments referred to in this Agreement)
contains the entire understanding of the Parties with respect to
the subject matter hereof, and supersedes and cancels all prior
agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting such
subject matter.
Section
8.11
Assignment.
Neither
this Agreement nor any of the rights, interests or obligations
under this Agreement may be assigned by any Party (whether by
operation of law or otherwise) without the prior written consent
of the other Party or Parties, as the case may be; provided,
however each of Parent and Merger Sub may assign its rights
under this Agreement without such prior written consent to any
of its Affiliates; provided, further, that any such assignment
shall not relieve such Party of its obligations hereunder.
A-25
Section
8.12
Construction;
Interpretation.
(a) The Parties agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting
party shall not be applied in the construction or interpretation
of this Agreement.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) References to $ mean U.S. dollars.
(d) References herein to a specific Section, Subsection,
Schedule or Annex shall refer, respectively, to Sections,
Subsections, Recitals, Schedules or Annexes of this Agreement.
(e) Wherever the word include,
includes or including is used in this
Agreement, it shall be deemed to be followed by the words
without limitation.
(f) References herein to any Law shall be deemed to refer
to such Law as amended, modified, codified, reenacted,
supplemented or superseded in whole or in part and in effect
from time to time, and also to all rules and regulations
promulgated thereunder.
(g) References herein to any Contract mean such Contract as
amended, supplemented or modified (including any waiver thereto)
in accordance with the terms thereof.
(h) The headings contained in this Agreement are intended
solely for convenience and shall not affect the rights of the
Parties.
(i) If the last day for the giving of any notice or the
performance of any act required or permitted under this
Agreement is a day that is not a Business Day, then the time for
the giving of such notice or the performance of such action
shall be extended to the next succeeding Business Day.
(j) References herein to as of the date hereof,
as of the date of this Agreement or words of similar
import shall be deemed to mean as of immediately prior to
the execution and delivery of this Agreement.
Section
8.13
Counterparts
. This
Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original but all of which will be
considered one and the same agreement.
Section
8.14
Transfer
Taxes
. Parent shall pay all transfer,
documentary, sales, use, stamp, registration and other such
Taxes and fees (including any penalties and interest) incurred
in connection with the transactions contemplated by this
Agreement. Purchaser shall file all necessary documents
(including, but not limited to, all Tax Returns) with respect to
all such amounts.
Section
8.15
No
Third Party Beneficiaries
. Except as provided in
Section 5.9, nothing in this Agreement, express or implied,
is intended to confer upon any Person not a party to this
Agreement any rights or remedies under or by reason of this
Agreement.
Section
8.16
Severability;
Enforcement
. Any term or provision of this
Agreement that is held invalid or unenforceable in any
jurisdiction by a court of competent jurisdiction will, as to
that jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or unenforceability of any
of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be held unenforceable by a court of competent jurisdiction,
such provision shall be interpreted to be only so broad as is
enforceable.
[remainder
of this page left intentionally blank]
A-26
IN WITNESS WHEREOF, the Parties have duly executed this
Agreement as of the date first above written.
MX HOLDINGS ONE, LLC
|
|
|
|
By:
|
/s/ Barry
F. Schwartz
|
Name: Barry
F. Schwartz
|
|
|
|
Title:
|
Executive Vice Chairman
|
MX HOLDINGS TWO, INC.
|
|
|
|
By:
|
/s/ Barry
F. Schwartz
|
Name: Barry
F. Schwartz
|
|
|
|
Title:
|
Executive Vice Chairman
|
MACANDREWS & FORBES
HOLDINGS INC.,
solely with respect to Section
5.3(a) and Article VIII
|
|
|
|
By:
|
/s/ Barry
F. Schwartz
|
Name: Barry
F. Schwartz
|
|
|
|
Title:
|
Executive Vice Chairman
|
M & F WORLDWIDE CORP.
Name: Paul
G. Savas
|
|
|
|
Title:
|
Executive Vice President and
Chief Financial Officer
|
A-27
[Letterhead of
Evercore]
September 10, 2011
The Special Committee of the Board
of Directors of
M & F Worldwide Corp.
35 East 62nd Street
New York, NY 10065
Members of the Special Committee:
We understand that M & F Worldwide Corp., a Delaware
corporation (the Company), proposes to enter into an
Agreement and Plan of Merger (the Merger Agreement),
with MX Holdings One, LLC, a Delaware limited liability company
(Parent), MX Holdings Two, Inc., a Delaware
corporation (Merger Sub), and MacAndrews &
Forbes Holdings Inc., a Delaware corporation
(M&F), pursuant to which Merger Sub will be
merged with and into the Company (the Merger). As a
result of the Merger, each outstanding share of common stock,
par value $0.01 per share, of the Company (the Company
Common Stock), other than shares owned by Merger Sub or
the Company and Dissenting Shares (as defined in the Merger
Agreement), will be converted into the right to receive $25.00
per share in cash, without interest (the Merger
Consideration). The terms and conditions of the Merger are
more fully set forth in the Merger Agreement and terms used
herein and not defined shall have the meanings ascribed thereto
in the Merger Agreement.
The Special Committee has asked us whether, in our opinion, the
Merger Consideration is fair, from a financial point of view, to
the holders of shares of Company Common Stock (other than
M&F and its affiliates) entitled to receive such Merger
Consideration.
In connection with rendering our opinion, we have, among other
things:
(i) reviewed certain publicly available business and
financial information relating to the Company that we deemed to
be relevant;
(ii) reviewed certain non-public historical financial
statements and other non-public historical financial and
operating data relating to the Company prepared and furnished to
us by management of the Company and its operating divisions;
(iii) reviewed certain non-public projected financial data
relating to the Company under alternative business assumptions
prepared and furnished to us by management of the Company and
its operating divisions;
(iv) reviewed certain non-public projected operating data
relating to the Company prepared and furnished to us by
management of the Company and its operating divisions;
(v) discussed the past and current operations, financial
projections and current financial condition of the Company with
management of the Company and its operating divisions (including
their views on the risks and uncertainties of achieving such
projections);
(vi) reviewed the reported prices and the historical
trading activity of the Company Common Stock;
(vii) compared the financial performance of the Company and
its stock market trading multiples with those of certain other
publicly traded companies that we deemed relevant;
(viii) compared the financial performance of the Company
and the valuation multiples relating to the Merger with those of
certain other transactions that we deemed relevant;
(ix) reviewed a draft, dated September 8, 2011, of the
Agreement (the Draft Agreement); and
B-1
(x) performed such other analyses and examinations and
considered such other factors that we deemed appropriate.
For purposes of our analysis and opinion, we have assumed and
relied upon, without undertaking any independent verification
of, the accuracy and completeness of all of the information
publicly available, and all of the information supplied or
otherwise made available to, discussed with, or reviewed by us,
and we assume no liability therefor. With respect to the
projected financial data relating to the Company and its
operating divisions referred to above, we have assumed that they
have been reasonably prepared on bases reflecting the best
then-available estimates and good faith judgments of the
respective managements of the Company and its operating
divisions as to the future financial performance of the Company
and its operating divisions under the alternative business
assumptions reflected therein. Management of the Company have
advised us that the assumptions regarding the Companys
expected refinancing plans for Harland Clarke Holding Corp.
(HCHC) as provided to us by the Companys
management in September 2011 (the Refinancing
Assumptions) reflect the best currently available
estimates and good faith judgments of management of the Company
as to the matters covered thereby. Management of HCHC have
advised us that the projected financial data for HCHC provided
to us by HCHCs management in July 2011 (the HCHC
Projections) reflect the best currently available
estimates and good faith judgments of management of HCHC as to
the future financial performance of HCHC. Management of Mafco
Worldwide Corporation (Mafco) have advised us that
the projected financial data for Mafco provided to us by
Mafcos management in June 2011 and reaffirmed in July 2011
(the Mafco Projections) reflect the best currently
available estimates and good faith judgments of management of
Mafco as to the future financial performance of Mafco. With the
consent of the Special Committee, we have relied on the
Refinancing Assumptions, the HCHC Projections and the Mafco
Projections for purposes of our analysis and opinion. We express
no view as to any projected financial data relating to the
Company, HCHC or Mafco or the assumptions on which they are
based.
For purposes of rendering our opinion, we have assumed, in all
respects material to our analysis, that the representations and
warranties of each party contained in the Agreement are true and
correct, that each party will perform all of the covenants and
agreements required to be performed by it under the Agreement
and that all conditions to the consummation of the Merger will
be satisfied without material waiver or modification thereof. We
have further assumed that all governmental, regulatory or other
consents, approvals or releases necessary for the consummation
of the Merger will be obtained without any material delay,
limitation, restriction or condition that would have an adverse
effect on the Company or the consummation of the Merger or
materially reduce the benefits to the holders of the Company
Common Stock of the Merger. We have also assumed, at the
direction of the Special Committee, that the executed Merger
Agreement will not differ in any material respect from the Draft
Agreement reviewed by us.
We have not made nor assumed any responsibility for making any
independent valuation or appraisal of the assets or liabilities
of the Company, nor have we been furnished with any such
appraisals, nor have we evaluated the solvency or fair value of
the Company under any state or federal laws relating to
bankruptcy, insolvency or similar matters. Our opinion is
necessarily based upon information made available to us as of
the date hereof and financial, economic, market and other
conditions as they exist and as can be evaluated on the date
hereof. It is understood that subsequent developments may affect
this opinion and that we do not have any obligation to update,
revise or reaffirm this opinion.
We have not been asked to pass upon, and express no opinion with
respect to, any matter other than the fairness to the holders of
the Company Common Stock (other than M&F and its
affiliates), from a financial point of view, of the Merger
Consideration. We do not express any view on, and our opinion
does not address, the fairness of the proposed transaction to,
or any consideration received in connection therewith by, the
holders of any other securities, creditors or other
constituencies of the Company, nor as to the fairness of the
amount or nature of any compensation to be paid or payable to
any of the officers, directors or employees of the Company, or
any class of such persons, whether relative to the Merger
Consideration or otherwise. We have assumed that any amendment
to the Merger Agreement will not amend or modify the structure
of the transaction in a manner material to our analysis. Our
opinion does not address the relative merits of the Merger as
compared to other business or financial strategies that might be
available to the Company, nor does it address the underlying
business decision of the Company to engage in the Merger. In
arriving at our opinion,
B-2
we were not authorized to solicit,
and did not solicit, interest from any third party with respect
to the acquisition of any or all of the Company Common Stock or
any business combination or other extraordinary transaction
involving the Company. This letter, and our opinion, does not
constitute a recommendation to the Board of Directors or to any
other persons in respect of the Merger, including as to how any
holder of shares of Company Common Stock should vote or act in
respect of the Merger. We express no opinion herein as to the
price at which shares of the Company will trade at any time. We
are not legal, regulatory, accounting or tax experts and have
assumed the accuracy and completeness of assessments by the
Company and its advisors with respect to legal, regulatory,
accounting and tax matters.
We have acted as financial advisor to the Special Committee in
connection with the Merger and have received fees in connection
therewith. We will receive a fee for our services upon the
rendering of this opinion and may receive, at the conclusion of
this engagement, an additional fee in the sole discretion of the
Special Committee. The Company has also agreed to reimburse our
expenses and to indemnify us against certain liabilities arising
out of our engagement. During the two year period prior to the
date hereof, no material relationship existed between Evercore
Group L.L.C. and its affiliates and the Company, Parent or
M&F pursuant to which compensation was received by Evercore
Group L.L.C. or its affiliates as a result of such a
relationship. We may provide financial or other services to the
Company, Parent or M&F in the future and in connection with
any such services we may receive compensation.
In the ordinary course of business, Evercore Group L.L.C. or its
affiliates may actively trade the securities, or related
derivative securities, or financial instruments of the Company
and its affiliates, for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or
short position in such securities or instruments.
This letter, and the opinion expressed herein is addressed to,
and for the information and benefit of, the Special Committee in
connection with their evaluation of the proposed Merger. The
issuance of this opinion has been approved by an Opinion
Committee of Evercore Group L.L.C.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Merger Consideration is fair, from a
financial point of view, to the holders of the shares of Company
Common Stock (other than M&F and its affiliates) entitled
to receive such Merger Consideration.
Very truly yours,
EVERCORE GROUP L.L.C.
Jonathan A. Knee
Senior Managing Director
B-3
Annex C
§ 262.
Appraisal rights.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to
such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to § 228 of this
title shall be entitled to an appraisal by the Court of Chancery
of the fair value of the stockholders shares of stock
under the circumstances described in subsections (b) and
(c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a
corporation; the words stock and share
mean and include what is ordinarily meant by those words; and
the words depository receipt mean a receipt or other
instrument issued by a depository representing an interest in 1
or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 255, § 256,
§ 257, § 258, § 263 or
§ 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of the meeting of stockholders to act
upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or
(ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote
of the stockholders of the surviving corporation as provided in
§ 251(f) of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 255, 256, 257, 258, 263 and 264
of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 or
§ 267 of this title is not owned by the parent
immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of incorporation,
any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all
of the assets of the corporation. If the certificate of
incorporation contains such a
C-1
provision, the procedures of this
section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for notice of such meeting (or such members who received
notice in accordance with § 255(c) of this title) with
respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) of this section that
appraisal rights are available for any or all of the shares of
the constituent corporations, and shall include in such notice a
copy of this section and, if 1 of the constituent corporations
is a nonstock corporation, a copy of § 114 of this
title. Each stockholder electing to demand the appraisal of such
stockholders shares shall deliver to the corporation,
before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholders shares.
Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
stockholders shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection
and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to
§ 228, § 253, or § 267 of this
title, then either a constituent corporation before the
effective date of the merger or consolidation or the surviving
or resulting corporation within 10 days thereafter shall
notify each of the holders of any class or series of stock of
such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such
class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section and, if 1 of
the constituent corporations is a nonstock corporation, a copy
of § 114 of this title. Such notice may, and, if given
on or after the effective date of the merger or consolidation,
shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holders
shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
holders shares. If such notice did not notify stockholders
of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second
notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of
such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such
a second notice to all such holders on or within 10 days
after such effective date; provided, however, that if such
second notice is sent more than 20 days following the
sending of the first notice, such second notice need only be
sent to each stockholder who is entitled to appraisal rights and
who has demanded appraisal of such holders shares in
accordance with this subsection. An affidavit of the secretary
or assistant secretary or of the transfer agent of the
corporation that is required to give either notice that such
notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the
notice is given, provided, that if the notice is given on or
after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is
fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections (a)
and (d) of this section hereof and who
C-2
is otherwise entitled to appraisal
rights, may commence an appraisal proceeding by filing a
petition in the Court of Chancery demanding a determination of
the value of the stock of all such stockholders. Notwithstanding
the foregoing, at any time within 60 days after the
effective date of the merger or consolidation, any stockholder
who has not commenced an appraisal proceeding or joined that
proceeding as a named party shall have the right to withdraw
such stockholders demand for appraisal and to accept the
terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this
section hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholders
written request for such a statement is received by the
surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal
under subsection (d) of this section hereof, whichever is
later. Notwithstanding subsection (a) of this section, a
person who is the beneficial owner of shares of such stock held
either in a voting trust or by a nominee on behalf of such
person may, in such persons own name, file a petition or
request from the corporation the statement described in this
subsection.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After the Court determines the stockholders entitled to
an appraisal, the appraisal proceeding shall be conducted in
accordance with the rules of the Court of Chancery, including
any rules specifically governing appraisal proceedings. Through
such proceeding the Court shall determine the fair value of the
shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with interest, if any, to be paid upon the amount
determined to be the fair value. In determining such fair value,
the Court shall take into account all relevant factors. Unless
the Court in its discretion determines otherwise for good cause
shown, interest from the effective date of the merger through
the date of payment of the judgment shall be compounded
quarterly and shall accrue at 5% over the Federal Reserve
discount rate (including any surcharge) as established from time
to time during the period between the effective date of the
merger and the date of payment of the judgment. Upon application
by the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court
may, in its discretion, proceed to trial upon the appraisal
prior to the final determination of the stockholders entitled to
an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such
stockholders certificates of stock to the
C-3
Register in Chancery, if such is
required, may participate fully in all proceedings until it is
finally determined that such stockholder is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Courts decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholders demand for an
appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the
merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval
may be conditioned upon such terms as the Court deems just;
provided, however that this provision shall not affect the right
of any stockholder who has not commenced an appraisal proceeding
or joined that proceeding as a named party to withdraw such
stockholders demand for appraisal and to accept the terms
offered upon the merger or consolidation within 60 days
after the effective date of the merger or consolidation, as set
forth in subsection (e) of this section.
(l) The shares of the surviving or resulting corporation to
which the shares of such objecting stockholders would have been
converted had they assented to the merger or consolidation shall
have the status of authorized and unissued shares of the
surviving or resulting corporation.
8 Del. C. 1953, § 262; 56 Del. Laws, c. 50; 56
Del. Laws, c. 186, § 24; 57 Del. Laws, c. 148,
§§ 27-29; 59 Del. Laws, c. 106,
§ 12; 60 Del. Laws, c. 371, §§ 3-12; 63
Del. Laws, c. 25, § 14; 63 Del. Laws, c. 152,
§§ 1, 2; 64 Del. Laws, c. 112,
§§ 46-54; 66 Del. Laws, c. 136,
§§ 30-32; 66 Del. Laws, c. 352, § 9; 67
Del. Laws, c. 376, §§ 19, 20; 68 Del.
Laws, c. 337, §§ 3, 4; 69 Del. Laws, c. 61,
§ 10; 69 Del. Laws, c. 262, §§ 1-9; 70
Del. Laws, c. 79, § 16; 70 Del. Laws, c. 186,
§ 1; 70 Del. Laws, c. 299, §§ 2, 3; 70
Del. Laws, c. 349, § 22; 71 Del. Laws, c. 120,
§ 15; 71 Del. Laws, c. 339, §§ 49-52;
73 Del. Laws, c. 82, § 21; 76 Del. Laws, c. 145,
§§ 11-16; 77 Del. Laws, c. 14,
§§ 12, 13; 77 Del. Laws, c. 253,
§§ 47-50; 77 Del. Laws, c. 290,
§§ 16, 17.
C-4
SPECIAL MEETING OF STOCKHOLDERS OF M & F WORLDWIDE CORP. December 21, 2011 Important Notice
Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on December
21, 2011. The proxy statement is available at
http://mandfworldwide.com/Financial_reporting/proxy_materials.htm Please sign, date and mail your
proxy card in the envelope provided as soon as possible. Please detach along perforated line and
mail in the envelope provided. 00030300000000000000 8 122111 Signature of Stockholder Date: Date:
To change the address on your account, please check the box at right and indicate your new address
in the address space above. Please note that changes to the registered name(s) on the account may
not be submitted via this method. 1. Adoption of the Agreement and Plan of Merger, dated as of
September 12, 2011, by and among M & F Worldwide Corp., MX Holdings One, LLC, MX Holdings Two,
Inc., and MacAndrews & Forbes Holdings, Inc., as described in the Proxy Statement. 2. Approval of the
adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if
there are not sufficient votes to adopt the Agreement and Plan of Merger. 3. In their discretion,
the proxies are authorized to vote upon such other business as may properly come before the Special
Meeting or any adjournment or postponement thereof on behalf of the undersigned, provided the
Company does not know, at a reasonable time before the Special Meeting, that such matters are to be
presented at the meeting. PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. FORAGAINSTABSTAINTHE BOARD RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE x Signature of Stockholder Note: Please sign exactly as your name or names
appear on this Proxy. When shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in partnership name by authorized person.
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0 M & F WORLDWIDE CORP. COMMON STOCK THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING TO BE HELD ON DECEMBER 21, 2011 The undersigned appoints Barry F. Schwartz,
Michael C. Borofsky and Edward P. Taibi, and each of them, attorneys and proxies, each with power
of substitution, to vote all shares of Common Stock of M & F Worldwide Corp. (the Company) that
the undersigned may be entitled to vote at the Special Meeting of Stockholders of the Company to be
held on December 21, 2011 on the proposals set forth on the reverse side hereof and on such other
matters as may properly come before the meeting and any adjournments or postponements thereof. The
proxy holders will vote the shares represented by this proxy in the manner indicated on the reverse
side hereof. Unless a contrary direction is indicated, the proxy holders will vote such shares
FOR adoption of the Agreement and Plan of Merger and FOR the proposal to adjourn the Special
Meeting, if necessary or appropriate, to solicit additional proxies. If any further matters
properly come before the Special Meeting, it is the intention of the persons named above to vote
such proxies in accordance with their best judgment. (Continued and to be signed on the reverse
side.) 14475
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SPECIAL MEETING OF STOCKHOLDERS OF M & F WORLDWIDE CORP. December 21, 2011 PROXY VOTING
INSTRUCTIONS INTERNET -Access www.voteproxy.com and follow the on-screen instructions. Have your
proxy card available when you access the web page. TELEPHONE -Call toll-free 1-800-PROXIES
(1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone
telephone and follow the instructions. Have your proxy card available when you call. Vote
online/phone until 11:59 PM EST the day before the meeting. MAIL -Sign, date and mail your proxy
card in the envelope provided as soon as possible. IN PERSON -You may vote your shares in person by
attending the Special Meeting. COMPANY NUMBER ACCOUNT NUMBER Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting To Be Held on December 21, 2011. The
proxy statement is available at http://mandfworldwide.com/Financial_reporting/proxy_materials.htm
Please detach along perforated line and mail in the envelope provided IF you are not voting via
telephone or the Internet. 00030300000000000000 8 122111 THE BOARD RECOMMENDS A VOTE FOR EACH OF
THE FOLLOWING PROPOSALS. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x 1. 2. 3. To change the address on your account,
please check the box at right and indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be submitted via this method.
Signature of Stockholder Date: FOR AGAINST ABSTAIN Adoption of the Agreement and Plan of Merger,
dated as of September 12, 2011, by and among M & F Worldwide Corp., MX Holdings One, LLC, MX
Holdings Two, Inc., and MacAndrews & Forbes Holdings, Inc., as described in the Proxy Statement. Approval
of the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional
proxies if there are not sufficient votes to adopt the Agreement and Plan of Merger. In their
discretion, the proxies are authorized to vote upon such other business as may properly come before
the Special Meeting or any adjournment or postponement thereof on behalf of the undersigned,
provided the Company does not know, at a reasonable time before the Special Meeting, that such
matters are to be presented at the meeting. PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE. Signature of Stockholder Date: Note: Please sign exactly as your name
or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please give full title as such. If the
signer is a corporation, please sign full corporate name by duly authorized officer, giving full
title as such. If signer is a partnership, please sign in partnership name by authorized person.
|
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