UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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
o
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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þ
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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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Preliminary Copy Subject to Completion
M & F WORLDWIDE CORP.
35 East 62nd Street
New York, NY 10065
[
], 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 [
], New York, NY, on [
], 2011, at [
] 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 [
], 2011
and is first being mailed to stockholders on or about [
], 2011.
Preliminary Copy Subject to Completion
M & F WORLDWIDE CORP.
35 East 62nd Street
New York, NY 10065
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
[
]
, 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 [
], New York, NY, on [
], 2011,
at [
] a.m. local time, for the following purposes:
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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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2.
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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 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 [
], 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.
[
], 2011
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of
Stockholders To be Held on [
], 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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20
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20
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20
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20
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21
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23
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23
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23
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25
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25
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36
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41
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53
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54
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56
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61
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62
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68
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70
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71
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73
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75
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75
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76
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82
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82
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82
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83
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83
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84
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85
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89
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91
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91
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94
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94
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94
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95
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97
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98
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98
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ii
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99
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99
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99
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100
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112
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116
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118
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Agreement and Plan of Merger
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ANNEX A
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Opinion of Evercore Group L.L.C.
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ANNEX B
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Section 262 of the Delaware General Corporation Law
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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
100.
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
118.
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 108.
1
MX Holdings One, LLC
35 East 62nd Street
New York, NY 10065
Tel: 212-572-8600
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
OfficersParent
beginning on page 108.
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 OfficersMerger Sub
beginning on
page 108.
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 20)
The special meeting will be held at [
], New York, NY, on [
], 2011, at [
] a.m. local time.
Record Date and Quorum (Page 20)
The holders of record of the common stock as of the close of business on [
], the record date
for the special meeting, are entitled to receive notice of and to vote at the special meeting.
2
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 20)
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 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 Holdings or its 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 CompanyContribution Agreement
beginning on page 113.
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 100.
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 unaffiliated 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
3
is an excluded stockholder), all of whom have expressed their intent to vote in favor of the
proposal to approve the Merger Agreement, 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).
Conditions to the Merger (Page 95)
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 95; 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
95;
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4
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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 95.
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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 36)
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 stockholders
(other than Holdings and its affiliates) 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, among other factors, the following, 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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information with respect to the Companys financial condition, results of
operations, businesses, competitive position and business strategy, on both a
historical and
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5
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prospective basis, as well as current industry, economic and market conditions and
trends;
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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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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 Company 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 41;
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the terms of the Merger Agreement, as more fully described in the section titled
The Merger Agreement
beginning on page 82;
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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 36.
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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 25;
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6
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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 41;
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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 36.
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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 41 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 53)
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 53 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 54)
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 54.
Plans for M & F Worldwide after the Merger (Page 61)
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 61 for an additional discussion as to the Holdings Filing Persons plans for the Company
after the merger.
Certain Effects of the Merger (Page 68)
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 70)
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 68. 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 70. 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.
8
Financing of the Merger (Page 71)
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
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 73)
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 75)
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 [
], 2011, the waiting period under the Hart-Scott-Rodino Act regarding Mr.
Perelmans acquisition of shares of M & F Worldwide pursuant to the merger expired.
Litigation (Page 76)
Beginning on June 14, 2011, following the announcement on June 13, 2011 by Holdings of its
proposal to acquire the outstanding shares of common stock not owned by it for cash, six putative
stockholder class action lawsuits were filed in the Delaware Court of Chancery, referred to herein
as the Delaware actions, and the Supreme Court for the State of New York, referred to herein as
the New York actions, challenging the merger. The Delaware actions and the New York actions each
name as defendants the Company, each of the current members of the Companys board of directors and
Holdings, and allege that the individual defendants breached their fiduciary duties under Delaware
law in connection with the merger, and that Holdings aided and abetted those alleged breaches.
9
The complaints in the Delaware actions and New York actions seek, among other things, to
preliminarily and permanently enjoin any transaction arising from the proposal, an accounting for
any damages resulting from the alleged wrongs, and rescissory damages if a transaction is
consummated prior to any final judgment. Plaintiffs further seek the costs of the action,
including reasonable attorneys fees and such other relief as may be just and proper.
On July 14, 2011, the parties to the Delaware actions stipulated to the consolidation of those
actions into a single action, referred to herein as the consolidated action. On September 14,
2011, the Delaware Court of Chancery granted the parties Stipulated Order of Class Certification
and Case Management, which, among other things, certified the consolidated 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 complaint in the consolidated 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 Court granted defendants cross-motion to dismiss or stay the
proposed lead New York action, dismissing that action without prejudice. On September 26, 2011,
the parties to the remaining New York action entered into a stipulation dismissing that action
without prejudice and without prejudice to plaintiffs right to intervene in the Delaware actions.
Defendants believe that the remaining lawsuits are entirely without merit and intend to defend
these actions vigorously.
Dissenters Rights of Appraisal (Page 76 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.
No Solicitation of Transactions (Page 91)
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 91;
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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 91, 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 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 91, 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 97)
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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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 98)
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 [
], 2011, starting at [
] a.m. local
time at [
], New York, NY.
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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.
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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
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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.
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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 unaffiliated
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 that is an excluded stockholder),
all of whom have expressed their intent to vote in favor of the proposal to approve
the Merger Agreement, 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).
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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 and entitled to vote on the matter.
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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
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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 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 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
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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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Q:
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Can I revoke my vote?
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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
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).
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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
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
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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; and
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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.
19
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 [
], 2011, starting
at [
] a.m. local time at [
], New York, NY, 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
[
], 2011.
Record Date and Quorum
The holders of record of common stock as of the close of business on [
], 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
20
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.
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 unaffiliated 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, 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).
Voting; Proxies; Revocation
Attendance
All holders of shares of common stock as of the close of business on [
], 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.
21
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.
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 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. Such 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. 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,
23
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.
24
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.
Following these discussions, Holdings determined that a transaction would be structured best as a
merger, and that it should be subject to the approval of both a special committee of the Companys
board of directors as well as holders of a majority of the outstanding shares of common stock other
than Holdings and its affiliates.
25
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.
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
26
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.
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.
27
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 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. Mr. Schwartz, the other
directors affiliated with Holdings and the other non-independent directors of the Company 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
28
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 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 stockholders of the
Company (other than Holdings and its affiliates) and should be approved by the board of directors,
or to elect not to pursue the Holdings proposal. The resolutions 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.
29
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 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. 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
30
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
committee information regarding the Companys historical stock price performance and certain
historical trading multiples, as well as Evercores preliminary financial analysis of the proposed
merger consideration, and the special committee discussed with its financial advisors the impact of
current market volatility on the Company and its stock price. 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. 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 combination with a company in HCHCs industry. 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 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.
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.
31
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
assumptions reflected Company managements views on the likely timing, structure and cost of a
refinancing for HCHC.
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
32
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, and
which had been provided to Evercore on August 31.
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 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.
33
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.
Mr. Savas next described the recent and projected
underperformance of certain business units of the Company, 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, 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 Company 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
34
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 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.
35
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 Companys
stockholders (other than Holdings and its affiliates). The Companys purpose and reasons for
undertaking the merger at this time are to enable the Companys stockholders (other than Holdings
and its affiliates) 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 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;
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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;
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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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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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the limited strategic alternatives to the merger, 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;
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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;
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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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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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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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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.
|
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:
|
|
|
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;
|
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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
|
39
|
|
|
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.
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:
|
|
|
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).
In reaching these determinations, our board of directors considered and adopted:
|
|
|
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:
40
|
|
|
the special committees having retained and received advice from its independent
financial and legal advisors;
|
|
|
|
|
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
|
|
|
|
|
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.
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.
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
41
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.
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;
|
|
|
|
|
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;
|
|
|
|
|
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;
|
|
|
|
|
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;
|
42
|
|
|
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 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
43
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 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.
44
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.
45
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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|
|
|
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|
Average
|
|
|
|
|
|
Historical
|
|
|
|
|
Closing
|
|
|
|
|
|
Closing
|
|
|
|
|
Prices
|
|
Premium/(Discount)
|
|
Prices
|
|
Premium/(Discount)
|
|
|
for
|
|
Based on
|
|
for the
|
|
Based on
|
|
|
the Period
|
|
Merger Consideration
|
|
Period
|
|
Merger Consideration
|
Current Price
(9/9/11)
|
|
$
|
20.37
|
|
|
|
22.7
|
%
|
|
$
|
20.37
|
|
|
|
22.7
|
%
|
Unaffected Price
(6/10/11)
|
|
$
|
16.96
|
|
|
|
47.4
|
%
|
|
$
|
16.96
|
|
|
|
47.4
|
%
|
One Week
Prior to 6/10/11
|
|
$
|
18.21
|
|
|
|
37.3
|
%
|
|
$
|
18.97
|
|
|
|
31.8
|
%
|
Two Weeks
Prior to 6/10/11
|
|
$
|
19.28
|
|
|
|
29.6
|
%
|
|
$
|
21.52
|
|
|
|
16.2
|
%
|
One Month
Prior to 6/10/11
|
|
$
|
20.96
|
|
|
|
19.3
|
%
|
|
$
|
22.66
|
|
|
|
10.3
|
%
|
Two Months
Prior to 6/10/11
|
|
$
|
22.63
|
|
|
|
10.5
|
%
|
|
$
|
25.24
|
|
|
|
(1.0
|
)%
|
Three Months Prior
to 6/10/11
|
|
$
|
23.48
|
|
|
|
6.5
|
%
|
|
$
|
24.96
|
|
|
|
0.2
|
%
|
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
|
)%
|
Two Years
Prior to 6/10/11
|
|
$
|
26.52
|
|
|
|
(5.7
|
)%
|
|
$
|
25.74
|
|
|
|
(2.9
|
)%
|
52-Week High
|
|
|
|
|
|
|
|
|
|
$
|
30.77
|
|
|
|
(18.8
|
)%
|
52-Week Low
|
|
|
|
|
|
|
|
|
|
$
|
16.77
|
|
|
|
49.1
|
%
|
46
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
capitalization plus total outstanding debt, less cash and cash equivalents), 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.
|
|
|
|
|
|
|
|
|
|
|
Company Adjusted
|
|
|
|
|
EBITDA
|
|
|
Period
|
|
(in millions)
|
|
TEV/Adjusted EBITDA
|
LFQ
|
|
$
|
445
|
|
|
|
5.6x
|
|
CY2011E
|
|
$
|
441
|
|
|
|
5.7x
|
|
CY2012E
|
|
$
|
459
|
|
|
|
5.4x
|
|
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 have certain characteristics
that are similar to those of the Company and its operating divisions. 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.
47
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. This analysis indicated the following
implied per share equity reference range for the Company, as compared to the merger consideration:
48
|
|
|
|
|
|
|
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 a discount rate range of
22.5% to 27.5%. The discount rate range was chosen by Evercore based upon an analysis of the
equity 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 each of its operating divisions. 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 noted that none of
the selected transactions or the companies that participated in the selected transactions is
directly comparable to the Company or the merger.
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 range
of multiples that Evercore calculated with respect to the selected transactions is summarized
below:
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. 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:
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
51
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 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:
|
|
|
Implied Per Share Equity
|
|
|
Reference Range for the Company
|
|
Merger Consideration
|
$21.39-$38.22
|
|
$25.00
|
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 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 arms-length 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.
52
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
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 pursuant to which
compensation was received by Evercore or its affiliates as a result of such relationship. 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.
53
An additional purpose of the merger is to enable unaffiliated stockholders 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 unaffiliated stockholders for cash.
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:
|
|
|
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;
|
|
|
|
|
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
|
54
|
|
|
Company in light of the ongoing decline and continuing challenges facing certain of
its businesses;
|
|
|
|
|
the merger will provide consideration to the Companys stockholders entirely in
cash, thus eliminating any uncertainty in valuing the merger consideration;
|
|
|
|
|
the presentations made by Moelis in connection with the proposed transaction with
the Company, as described elsewhere;
|
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
|
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;
|
|
|
|
|
the special committee was deliberative in its process, taking three months to
analyze, evaluate and negotiate the terms of the merger;
|
|
|
|
|
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;
|
|
|
|
|
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;
|
|
|
|
|
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;
|
|
|
|
|
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);
|
|
|
|
|
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
stockholders (other than Holdings and its affiliates) and (iii) resolved to
|
55
|
|
|
recommend that the stockholders of the Company approve the Merger Agreement;
|
|
|
|
|
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.
;
|
|
|
|
|
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
|
|
|
|
|
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.
|
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, which is an accounting concept, as a factor because its members believed that net book
value is not a material indicator of the value of the Company as a going concern but rather is
indicative of historical costs.
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
56
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:
|
|
|
reviewed certain publicly available business and financial information relating to
the Company that Moelis deemed relevant;
|
|
|
|
|
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;
|
|
|
|
|
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;
|
|
|
|
|
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
|
|
|
|
|
conducted such other financial studies and analyses and took into account such other
information as Moelis deemed appropriate.
|
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
57
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-Day
|
|
1-Week
|
|
1-Month
|
|
|
|
Median Offer Price Premium
|
|
|
20.2%
|
|
|
|
23.0%
|
|
|
|
27.4%
|
|
MFW Average Trading Price
|
|
$
|
17.90
|
|
|
$
|
18.70
|
|
|
$
|
21.05
|
|
Implied MFW Offer Price
|
|
$
|
21.51
|
|
|
$
|
23.00
|
|
|
$
|
26.81
|
|
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
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
58
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perpetuity Growth
|
|
|
Discount Rates
|
|
Rates
|
Segment
|
|
Min
|
|
Max
|
|
Min
|
|
Max
|
Harland Clarke
|
|
|
11.5
|
%
|
|
|
12.5
|
%
|
|
|
(2.0
|
%)
|
|
|
0
|
%
|
Harland Financial Solutions
|
|
|
12.5
|
%
|
|
|
13.5
|
%
|
|
|
2.0
|
%
|
|
|
4.0
|
%
|
Scantron-Legacy Business
|
|
|
11.5
|
%
|
|
|
12.5
|
%
|
|
|
(11.0
|
%)
|
|
|
(9.0
|
%)
|
Scantron-Performance and Achievement
|
|
|
16.5
|
%
|
|
|
17.5
|
%
|
|
|
3.0
|
%
|
|
|
5.0
|
%
|
Mafco Worldwide
|
|
|
11.0
|
%
|
|
|
12.0
|
%
|
|
|
(1.0
|
%)
|
|
|
1.0
|
%
|
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 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.
59
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. 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 determined
by Moelis in its professional judgment to share similar characteristics with the business of each
segment.
|
|
|
|
|
|
|
|
|
|
|
Multiple of Estimated 2011 EBITDA
|
Segment
|
|
Low Multiple
|
|
High Multiple
|
Harland Clarke
|
|
|
4.0x
|
|
|
|
4.5x
|
|
Harland Financial Solutions
|
|
|
7.0x
|
|
|
|
8.0x
|
|
Scantron-Legacy Business
|
|
|
4.0x
|
|
|
|
4.5x
|
|
Mafco Worldwide
|
|
|
5.0x
|
|
|
|
6.0x
|
|
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.
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
60
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.
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
61
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 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.
62
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 developments. These initial projections, referred to herein as the Initial Financing
Case Projections, are summarized below:
63
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:
64
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 views on the likely timing, structure and cost of a
refinancing. 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:
65
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:
66
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.
|
67
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
68
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.
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.
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 six months ended June 30, 2011, the following table shows
what Mr. Perelmans interests in the Companys net book value and net earnings were as of June 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
six months ended
June 30, 2011
|
|
$
|
50.1
|
|
|
$
|
21.7
|
|
|
|
43.4
|
%
|
|
$
|
50.1
|
|
|
|
100
|
%
|
Net book value as
of June 30, 2011
|
|
$
|
689.9
|
|
|
$
|
299.4
|
|
|
|
43.4
|
%
|
|
$
|
689.9
|
|
|
|
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.
69
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.
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.
70
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 (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
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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.
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
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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.
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
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;
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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
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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 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.
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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 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 [
],
2011, the waiting period under the Hart-Scott-Rodino Act regarding Mr. Perelmans acquisition of
shares of common stock pursuant to the merger expired.
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.
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Litigation
Beginning on June 14, 2011, following the announcement on June 13, 2011 by Holdings of its
proposal to acquire the outstanding shares of common stock not owned by it for cash, the Delaware
actions and New York actions were filed. The Delaware actions and the New York actions each name
as defendants the Company, each of the current members of our board of directors and Holdings, and
allege that the individual defendants breached their fiduciary duties under Delaware law in
connection with the merger, and that Holdings aided and abetted those alleged breaches.
The complaints in the Delaware actions and New York actions seek, among other things, to
preliminarily and permanently enjoin any transaction arising from the proposal, an accounting for
any damages resulting from the alleged wrongs, and rescissory damages if a transaction is
consummated prior to any final judgment. Plaintiffs further seek the costs of the action,
including reasonable attorneys fees and such other relief as may be just and proper.
On July 14, 2011, the parties to the Delaware actions stipulated to the consolidation of those
actions into a single consolidated action. On September 14, 2011, the Delaware Court of Chancery
granted the parties Stipulated Order of Class Certification and Case Management, which, among
other things, certified the consolidated 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 complaint
in the consolidated 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 Court granted defendants cross-motion to dismiss or stay the
proposed lead New York action, dismissing that action without prejudice. On September 26, 2011,
the parties to the remaining New York action entered into a stipulation dismissing that action
without prejudice and without prejudice to plaintiffs right to intervene in the Delaware actions.
Defendants believe that the remaining lawsuits 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
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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
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
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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 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
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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 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
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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 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
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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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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
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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.
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.
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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 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.
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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
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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 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
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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 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
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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 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
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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
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consultation with
outside legal counsel, that failure to take such action would be inconsistent with its fiduciary
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, 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.
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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 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.
|
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.
|
Our obligation to complete the merger is subject to satisfaction or waiver of the following
additional conditions, any of which may be waived:
|
|
|
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
|
95
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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.
|
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:
|
|
|
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
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.
|
96
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.
|
Parent may terminate the Merger Agreement if:
|
|
|
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 being
cured, or is not cured, within 15 days following receipt of written notice of such
breach.
|
The Company may terminate the Merger Agreement if:
|
|
|
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;
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|
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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.
|
97
Estimated Fees and Expenses
The estimated fees and expenses incurred or expected to be incurred in connection with the
merger are as follows:
|
|
|
|
|
|
Description
|
|
Amount
|
Financial advisory fee
|
|
$[
]
|
|
|
Legal fees and expenses
|
|
$[
]
|
|
|
Proxy solicitation fees
|
|
$[
]
|
|
|
SEC filing fees
|
|
$31,753.15
|
|
|
Printing and mailing costs
|
|
$[
]
|
|
|
Paying agent fees
|
|
$[
]
|
|
|
Total
|
|
$[
]
|
|
|
In addition, it is expected that Merger Sub and/or Parent will incur approximately $[
]
million of financing costs, as well as legal 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:
|
|
|
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
|
|
|
|
|
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.
|
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;
|
98
|
|
|
if Parent terminates upon an Adverse Company Recommendation, under circumstances in
which the $8,250,000 termination fee described above is not payable; or
|
|
|
|
|
if we terminate the Merger Agreement as provided above because of an Adverse Company
Recommendation made in connection with an intervening event.
|
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.
99
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
100
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 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 was Chief Executive
Officer of Panavision until May 2011. Mr. Bevins began his tenure at Panavision in June 2009. Mr.
Bevins has been Senior Executive Vice President of Holdings since December 2010.
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 55
th
Street 22
nd
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.
101
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
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
102
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 President Finance 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. 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.
103
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,
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 six months ended June 30, 2011 and June 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 June 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.
104
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|
|
|
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Year Ended
|
|
|
Six Months Ended
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2010(a)
|
|
|
2009(b)
|
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|
2008(c)
|
|
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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
|
|
|
$
|
871.5
|
|
|
$
|
908.5
|
|
Cost of revenues
|
|
|
1,028.5
|
|
|
|
1,055.4
|
|
|
|
1,128.3
|
|
|
|
889.3
|
|
|
|
439.2
|
|
|
|
512.9
|
|
|
|
523.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
754.1
|
|
|
|
758.7
|
|
|
|
777.9
|
|
|
|
583.5
|
|
|
|
282.8
|
|
|
|
358.6
|
|
|
|
385.4
|
|
Selling, general and administrative
expenses
|
|
|
414.5
|
|
|
|
415.6
|
|
|
|
467.9
|
|
|
|
357.5
|
|
|
|
162.0
|
|
|
|
217.2
|
|
|
|
207.1
|
|
Asset impairment charges
|
|
|
3.7
|
|
|
|
44.4
|
|
|
|
2.4
|
|
|
|
3.1
|
|
|
|
|
|
|
|
2.3
|
|
|
|
0.6
|
|
Restructuring costs
|
|
|
22.3
|
|
|
|
32.5
|
|
|
|
14.6
|
|
|
|
5.6
|
|
|
|
3.3
|
|
|
|
6.0
|
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
313.6
|
|
|
|
266.2
|
|
|
|
293.0
|
|
|
|
217.3
|
|
|
|
117.5
|
|
|
|
133.1
|
|
|
|
167.5
|
|
Interest expense, net
|
|
|
(116.8
|
)
|
|
|
(137.4
|
)
|
|
|
(186.7
|
)
|
|
|
(163.3
|
)
|
|
|
(65.3
|
)
|
|
|
(54.7
|
)
|
|
|
(60.8
|
)
|
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
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
196.1
|
|
|
|
192.7
|
|
|
|
109.0
|
|
|
|
(0.5
|
)
|
|
|
52.2
|
|
|
|
71.6
|
|
|
|
106.5
|
|
Provision for income taxes
|
|
|
75.2
|
|
|
|
73.0
|
|
|
|
42.0
|
|
|
|
3.7
|
|
|
|
16.0
|
|
|
|
21.5
|
|
|
|
43.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before extraordinary gain
|
|
|
120.9
|
|
|
|
119.7
|
|
|
|
67.0
|
|
|
|
(4.2
|
)
|
|
|
36.2
|
|
|
|
50.1
|
|
|
|
63.4
|
|
Extraordinary gain
|
|
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
120.9
|
|
|
$
|
119.7
|
|
|
$
|
67.7
|
|
|
$
|
(4.2
|
)
|
|
$
|
36.2
|
|
|
$
|
50.1
|
|
|
$
|
63.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share before
extraordinary gain:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
6.26
|
|
|
$
|
6.20
|
|
|
$
|
3.30
|
|
|
$
|
(0.20
|
)
|
|
$
|
1.82
|
|
|
$
|
2.59
|
|
|
$
|
3.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
6.22
|
|
|
$
|
6.17
|
|
|
$
|
3.30
|
|
|
$
|
(0.20
|
)
|
|
$
|
1.78
|
|
|
$
|
2.57
|
|
|
$
|
3.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
2.59
|
|
|
$
|
3.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
6.22
|
|
|
$
|
6.17
|
|
|
$
|
3.34
|
|
|
$
|
(0.20
|
)
|
|
$
|
1.78
|
|
|
$
|
2.57
|
|
|
$
|
3.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
June 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
|
|
|
$
|
3,788.7
|
|
|
$
|
3,715.4
|
|
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
|
|
|
|
2,236.9
|
|
|
|
2,284.2
|
|
Stockholders equity
|
|
|
642.5
|
|
|
|
514.0
|
|
|
|
380.3
|
|
|
|
405.5
|
|
|
|
410.5
|
|
|
|
689.9
|
|
|
|
569.5
|
|
|
|
|
(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.
|
|
(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 $3.8 million and
$4.8 million at June 30, 2011 and 2010, respectively.
|
105
Ratio of Earnings to Fixed Charges
The following table presents our ratio of earnings to fixed charges for the fiscal periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
Year Ended December 31,
|
|
|
Ended June 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
|
|
|
$
|
71.6
|
|
|
$
|
106.5
|
|
Fixed charges
|
|
|
133.4
|
|
|
|
154.7
|
|
|
|
208.1
|
|
|
|
187.2
|
|
|
|
76.1
|
|
|
|
62.1
|
|
|
|
69.2
|
|
Amortization of capitalized
interest
|
|
|
0.5
|
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
0.2
|
|
|
|
0.2
|
|
Capitalized interest
|
|
|
(0.1
|
)
|
|
|
(0.3
|
)
|
|
|
(0.7
|
)
|
|
|
(0.4
|
)
|
|
|
(1.0
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
$
|
329.9
|
|
|
$
|
347.5
|
|
|
$
|
316.7
|
|
|
$
|
186.5
|
|
|
$
|
127.3
|
|
|
$
|
133.8
|
|
|
$
|
175.9
|
|
Computation of fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
117.8
|
|
|
$
|
139.1
|
|
|
$
|
190.9
|
|
|
$
|
172.7
|
|
|
$
|
68.0
|
|
|
$
|
54.9
|
|
|
$
|
61.4
|
|
Capitalized interest
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
0.7
|
|
|
|
0.4
|
|
|
|
1.0
|
|
|
|
0.1
|
|
|
|
|
|
Amortization of deferred
financing fees and original
discount
|
|
|
7.7
|
|
|
|
7.3
|
|
|
|
8.2
|
|
|
|
7.9
|
|
|
|
4.3
|
|
|
|
3.5
|
|
|
|
3.8
|
|
Interest portion of operating
lease expense
|
|
|
7.8
|
|
|
|
8.0
|
|
|
|
8.3
|
|
|
|
6.2
|
|
|
|
2.8
|
|
|
|
3.6
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed charges
|
|
$
|
133.4
|
|
|
$
|
154.7
|
|
|
$
|
208.1
|
|
|
$
|
187.2
|
|
|
$
|
76.1
|
|
|
$
|
62.1
|
|
|
$
|
69.2
|
|
Ratio of earnings to fixed charges
|
|
|
2.5
|
|
|
|
2.2
|
|
|
|
1.5
|
|
|
|
1.0
|
|
|
|
1.7
|
|
|
|
2.2
|
|
|
|
2.5
|
|
Book Value Per Share
Our net book value per share as of June 30, 2011 is $35.68 (calculated based on 19,333,931
shares outstanding as of such date).
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 (through September 27, 2011)
|
|
$
|
26.99
|
|
|
$
|
18.71
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
42.75
|
|
|
$
|
30.25
|
|
Second Quarter
|
|
$
|
34.02
|
|
|
$
|
26.01
|
|
106
|
|
|
|
|
|
|
|
|
|
|
Market Price
|
|
|
High
|
|
Low
|
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.
107
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.
108
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.
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.
109
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.
110
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 September 27, 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:
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially
|
|
|
Name
|
|
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
|
|
|
23,521
|
(6)
|
|
|
*
|
|
Theo W. Folz
|
|
|
20,256
|
(7)
|
|
|
*
|
|
John M. Keane
|
|
|
12,007
|
(8)
|
|
|
*
|
|
Paul M. Meister
|
|
|
111,175
|
(9)
|
|
|
*
|
|
Ronald O. Perelman
|
|
|
8,394,000
|
(10)
|
|
|
43.4
|
%
|
Paul G. Savas
|
|
|
6,000
|
|
|
|
*
|
|
Barry F. Schwartz
|
|
|
10,000
|
|
|
|
*
|
|
Bruce Slovin
|
|
|
133,054
|
(11)
|
|
|
*
|
|
Stephen G. Taub
|
|
|
-0-
|
|
|
|
*
|
|
Carl Webb
|
|
|
18,153
|
(12)
|
|
|
*
|
|
All directors and executive
officers as a group (14 persons)
|
|
|
8,766,008
|
|
|
|
45.3
|
%
|
|
|
|
*
|
|
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.
|
111
|
|
|
(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.
|
|
(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 23,521 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)
|
|
Includes 12,007 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 38,759 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 32,054 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.
112
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
113
'
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 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.
114
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
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.
115
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
116
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.
117
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 13E3 with respect to the
merger. The Schedule 13E3, 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 13E3 will
be amended to report promptly any material change in the information set forth in the most recent
Schedule 13E3 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:
118
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 June 30, 2011 and March
31, 2011
Definitive Proxy Statement for the Companys 2011 Annual Meeting, filed April
22, 2011
Current Reports on Form 8-K, filed March 4, 2011, April 11, 2011, May 5, 2011,
May 12, 2011, May 13, 2011, May 20, 2011, August 4, 2011 and September 12,
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 [
], 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.
119
Annex A
EXECUTION VERSION
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
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE I
DEFINED TERMS
|
Section 1.1
|
|
Definitions
|
|
|
1
|
|
|
ARTICLE II
THE MERGER
|
Section 2.1
|
|
The Merger
|
|
|
4
|
|
Section 2.2
|
|
Effective Time
|
|
|
4
|
|
Section 2.3
|
|
Closing
|
|
|
4
|
|
Section 2.4
|
|
Certificate of Incorporation; Bylaws; Directors and Officers
|
|
|
5
|
|
Section 2.5
|
|
Effect of Merger on Capital Stock
|
|
|
5
|
|
Section 2.6
|
|
Dissenting Shares
|
|
|
5
|
|
Section 2.7
|
|
Exchange of Certificates; Payment for Common Stock
|
|
|
6
|
|
Section 2.8
|
|
Deferred Stock Accounts
|
|
|
8
|
|
Section 2.9
|
|
Adjustments to Merger Consideration
|
|
|
8
|
|
|
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
Section 3.1
|
|
Organization and Qualification
|
|
|
8
|
|
Section 3.2
|
|
Capitalization
|
|
|
8
|
|
Section 3.3
|
|
Subsidiaries
|
|
|
9
|
|
Section 3.4
|
|
Authorization; Approval and Fairness
|
|
|
9
|
|
Section 3.5
|
|
Consents
|
|
|
9
|
|
Section 3.6
|
|
Brokers and Finders
|
|
|
10
|
|
Section 3.7
|
|
Proxy Statement;
Schedule 13E-3
|
|
|
10
|
|
Section 3.8
|
|
SEC Documents; Financial Statements; Sarbanes-Oxley
|
|
|
10
|
|
Section 3.9
|
|
Absence of Certain Changes or Events
|
|
|
11
|
|
Section 3.10
|
|
No Undisclosed Liabilities
|
|
|
11
|
|
Section 3.11
|
|
Compliance with Laws
|
|
|
11
|
|
Section 3.12
|
|
Legal Proceedings
|
|
|
11
|
|
Section 3.13
|
|
Intellectual Property
|
|
|
11
|
|
Section 3.14
|
|
Contracts
|
|
|
12
|
|
Section 3.15
|
|
Takeover Statutes
|
|
|
12
|
|
|
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
|
Section 4.1
|
|
Organization and Qualification
|
|
|
12
|
|
Section 4.2
|
|
Authorization
|
|
|
12
|
|
Section 4.3
|
|
Consents
|
|
|
13
|
|
Section 4.4
|
|
Financing
|
|
|
13
|
|
Section 4.5
|
|
Brokers and Finders
|
|
|
13
|
|
Section 4.6
|
|
Proxy Statement;
Schedule 13E-3
|
|
|
13
|
|
Section 4.7
|
|
Solvency of Parent and the Surviving Corporation
|
|
|
13
|
|
Section 4.8
|
|
Ownership of Shares
|
|
|
13
|
|
Section 4.9
|
|
No Other Representations or Warranties
|
|
|
14
|
|
A-i
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
ARTICLE V
CERTAIN COVENANTS AND AGREEMENTS
|
Section 5.1
|
|
Certain Actions Pending Merger
|
|
|
14
|
|
Section 5.2
|
|
Proxy Statement
|
|
|
15
|
|
Section 5.3
|
|
Stockholders Meeting
|
|
|
16
|
|
Section 5.4
|
|
No Solicitation; No Adverse Company Recommendation
|
|
|
16
|
|
Section 5.5
|
|
Reasonable Best Efforts
|
|
|
18
|
|
Section 5.6
|
|
Access
|
|
|
19
|
|
Section 5.7
|
|
Notification of Certain Matters
|
|
|
19
|
|
Section 5.8
|
|
Public Announcements
|
|
|
19
|
|
Section 5.9
|
|
Directors and Officers Indemnification
|
|
|
19
|
|
Section 5.10
|
|
Stockholder Litigation
|
|
|
20
|
|
Section 5.11
|
|
Rule 16b-3
|
|
|
20
|
|
Section 5.12
|
|
Knowledge of Inaccuracies
|
|
|
20
|
|
|
ARTICLE VI
CONDITIONS PRECEDENT
|
Section 6.1
|
|
Conditions to each Partys Obligation to Effect the Merger
|
|
|
21
|
|
Section 6.2
|
|
Conditions to the Obligation of the Company to Effect the Merger
|
|
|
21
|
|
Section 6.3
|
|
Conditions to the Obligation of Purchasers to Effect the Merger
|
|
|
21
|
|
|
ARTICLE VII
TERMINATION
|
Section 7.1
|
|
Termination
|
|
|
22
|
|
Section 7.2
|
|
Effect of Termination
|
|
|
23
|
|
Section 7.3
|
|
Termination Fee
|
|
|
23
|
|
|
ARTICLE VIII
MISCELLANEOUS
|
Section 8.1
|
|
Non-Survival of Representations and Warranties
|
|
|
23
|
|
Section 8.2
|
|
Amendment
|
|
|
24
|
|
Section 8.3
|
|
Waiver
|
|
|
24
|
|
Section 8.4
|
|
Special Committee Approval
|
|
|
24
|
|
Section 8.5
|
|
Expenses
|
|
|
24
|
|
Section 8.6
|
|
Guarantee
|
|
|
24
|
|
Section 8.7
|
|
Actions by Dual Employees
|
|
|
24
|
|
Section 8.8
|
|
Applicable Law; Jurisdiction; Specific Performance
|
|
|
24
|
|
Section 8.9
|
|
Notices
|
|
|
25
|
|
Section 8.10
|
|
Entire Agreement
|
|
|
25
|
|
Section 8.11
|
|
Assignment
|
|
|
25
|
|
Section 8.12
|
|
Construction; Interpretation
|
|
|
26
|
|
Section 8.13
|
|
Counterparts
|
|
|
26
|
|
Section 8.14
|
|
Transfer Taxes
|
|
|
26
|
|
Section 8.15
|
|
No Third Party Beneficiaries
|
|
|
26
|
|
Section 8.16
|
|
Severability; Enforcement
|
|
|
26
|
|
A-ii
INDEX OF
DEFINED TERMS
|
|
|
|
|
Acceptable Confidentiality Agreement
|
|
|
2
|
|
Acquisition Proposal
|
|
|
2
|
|
Adverse Company Recommendation
|
|
|
24
|
|
Affiliates
|
|
|
2
|
|
Agreement
|
|
|
1
|
|
Benefit Plan
|
|
|
2
|
|
Book-Entry Shares
|
|
|
8
|
|
Business Day
|
|
|
2
|
|
Bylaws
|
|
|
6
|
|
Certificate of Incorporation
|
|
|
6
|
|
Certificate of Merger
|
|
|
6
|
|
Certificates
|
|
|
8
|
|
Closing
|
|
|
6
|
|
Closing Date
|
|
|
6
|
|
Code
|
|
|
3
|
|
Common Stock
|
|
|
1
|
|
Company
|
|
|
1
|
|
Company Board
|
|
|
1
|
|
Company Disclosure Schedule
|
|
|
11
|
|
Company IP
|
|
|
16
|
|
Company Recommendation
|
|
|
13
|
|
Company Stockholders Meeting
|
|
|
23
|
|
Company Subsidiaries
|
|
|
12
|
|
Contract
|
|
|
3
|
|
Contributing Stockholders
|
|
|
1
|
|
Control
|
|
|
3
|
|
Covered Person
|
|
|
28
|
|
DGCL
|
|
|
1
|
|
Dissenting Shares
|
|
|
7, 8
|
|
Dual Employee
|
|
|
3
|
|
Effective Time
|
|
|
6
|
|
Equity Contribution
|
|
|
1
|
|
ERISA
|
|
|
2
|
|
Exchange Act
|
|
|
3
|
|
Exchange Fund
|
|
|
8
|
|
Excluded Shares
|
|
|
7
|
|
GAAP
|
|
|
3
|
|
Governmental Entity
|
|
|
3
|
|
HSR Act
|
|
|
14
|
|
Intellectual Property
|
|
|
16
|
|
Intervening Event
|
|
|
3
|
|
Judgment
|
|
|
3
|
|
Knowledge
|
|
|
3
|
|
Law
|
|
|
3
|
|
A-iii
|
|
|
|
|
Liabilities
|
|
|
4
|
|
Lien
|
|
|
4
|
|
M&F
|
|
|
1
|
|
Material Adverse Effect
|
|
|
4
|
|
Material Contract
|
|
|
17
|
|
Maximum Premium
|
|
|
29
|
|
Merger
|
|
|
1
|
|
Merger Consideration
|
|
|
7
|
|
Merger Sub
|
|
|
1
|
|
Merger Sub Common Stock
|
|
|
1
|
|
Parent
|
|
|
1
|
|
Parent Expenses
|
|
|
33
|
|
Party
|
|
|
4
|
|
Paying Agent
|
|
|
8
|
|
Person
|
|
|
5
|
|
Proxy Statement
|
|
|
22
|
|
Public Stockholders
|
|
|
5
|
|
Purchasers
|
|
|
1
|
|
Representatives
|
|
|
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
|
|
|
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
A-1
Company, including 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.
A-2
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.
A-3
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
A-4
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
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names, and all other source indicators and all goodwill
associated therewith and symbolized thereby; (ii) patents
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.
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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
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,
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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.
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;
A-14
(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 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
A-15
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.
(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.
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(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 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
A-17
(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 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
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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).
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
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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% 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.
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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.
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.
A-21
(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.
(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.
A-22
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 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.
A-23
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.
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
A-24
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.
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
|
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By:
|
/s/ Barry
F. Schwartz
|
Name: Barry F. Schwartz
|
|
|
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Title:
|
Executive Vice Chairman
|
M & F WORLDWIDE CORP.
Name: Paul G. Savas
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Title:
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Executive Vice President and
Chief Financial Officer
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A-27
Annex B
[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
(x) performed such other analyses and examinations and
considered such other factors that we deemed appropriate.
B-1
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, 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
B-2
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
Section 262
of the Delaware General Corporation Law
§ 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
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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
C-3
stock to the 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
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 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 __________, 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 __________, 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. ____, 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 COMPANY NUMBER card available when you call. Vote
online/phone until 11:59 PM EST the day before the meeting. ACCOUNT NUMBER 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. Important Notice Regarding the Availability of
Proxy Materials for the Stockholder Meeting To Be Held on , 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 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 FOR AGAINST ABSTAIN 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, as described in the Proxy
Statement 2. Approval of the adjournment of the Special Meeting, if necessary or appropriate, to
solicit addiitional proxies if there are not sufficient votes to adopt the Agreement and Plan of
Meger. 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. JOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038 To change the address on
your account, please check the box at right and PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY
PROMPTLY USING indicate your new address in the address space above. Please note that THE ENCLOSED
ENVELOPE. changes to the registered name(s) on the account may not be submitted via this method.
Signature of Stockholder Date: 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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