NuCO2
Inc.
Frequently
Asked Questions
Aurora
Merger
January
30, 2008
Question:
Why does the Board of Directors believe that it is an appropriate
time to sell
the Company?
Answer:
While the Board of Directors (the “Board”) of NuCO
2
Inc.,
a
Florida corporation (“NuCO
2
”
or
the
“Company”) is excited about its future business prospects, the all-cash offer
of
$30.00 per share represents a premium of approximately 24.6% over
the Company’s
closing share price of $24.08 immediately prior to the signing of
the merger
agreement. The Board believes that the transaction is in the best
interests of its shareholders and gives the Company the resources
and
opportunities to better grow and develop its business.
Question: Who
is the buyer?
Answer:
Affiliates of Aurora Capital Group, a Los Angeles-based private equity
firm with
approximately $2.0 billion of private equity capital under management
(“Aurora”). Aurora is highly experienced in completing acquisitions
of this kind and, historically, has focused on acquiring middle-market
companies, like NuCO
2
. We
encourage you to visit Aurora’s website at www.auroracap.com.
Question: Has
the Board approved the transaction?
Answer: The
independent directors of the Board have unanimously adopted the merger
agreement
and approved the transactions contemplated thereby.
Question: When
do you anticipate closing?
Answer:
We hope to close the transaction in the second calendar quarter of
2008. Both NuCO
2
and
Aurora
are committed to closing the transaction as quickly as possible.
Question: What
are the terms of the transaction?
Answer: An
affiliate of Aurora will acquire all of the outstanding common shares
of
NuCO
2
for $30.00 per share in cash through a merger transaction. The
total enterprise value of the transaction is approximately $487
million. Upon consummation of the merger, NuCO
2
’s
shares
will cease trading on NASDAQ and NuCO
2
shareholders
will
not own shares in the new privately-held company.
Question: Is
the merger consideration taxable to me?
Answer: The
merger will be a taxable transaction. If you are a U.S. taxpayer, the
cash you receive for your NuCO
2
shares
will result in you recognizing gain or loss equal to the difference
between the
cash consideration you receive in the merger and your tax basis in
your
NuCO
2
stock.
Question: How
will NuCO
2
stock options granted under its employee stock option plans
be treated in
the merger?
Answer: Each
outstanding stock option to purchase shares of NuCO
2
granted
under the Company’s employee stock option plans with a per share exercise price
of less than the merger consideration of $30.00 per share will become
fully
vested and will entitle the holder to be paid, in exchange for the
cancellation
of such stock option, an amount in cash (subject to any applicable
withholding
taxes) equal to the product of (i) the difference between the merger
consideration and the applicable exercise price per share of such
stock option,
and (ii) the aggregate number of shares of common stock issuable
upon exercise
of such stock option.
Question: What
are the conditions to closing the merger agreement?
Answer: The
merger agreement contains customary closing conditions for both sides,
including
regulatory approval, satisfying the conditions of the proposed financing
and the
approval of NuCO
2
’s
shareholders. For more details, please refer to the definitive proxy
statement, which will be mailed to shareholders prior to the shareholders’
meeting.
Question: Does
the transaction require antitrust filings and approval?
Answer:
Yes. This transaction must satisfy the pre-merger notification
requirements under the Hart-Scott-Rodino Antitrust Improvements Act
of
1976.
Question:
What percentage of shareholders must approve the transaction?
Answer:
The transaction requires approval by a majority of the outstanding
shares of
common stock of the Company.
Question: What
are the details of Aurora’s financing?
Answer:
Aurora has secured equity and debt financing commitments, which are
subject to
customary conditions, to consummate the transaction. For more
details, please refer to the definitive proxy statement, which will
be mailed to
shareholders prior to the shareholders’ meeting.
Question:
Did NuCO
2
entertain competing offers for the Company?
Answer:
NuCO
2
took all actions that it deemed appropriate to ensure that
shareholders
are getting the best price, while also not putting the offer from
Aurora at
risk. In addition, during the 45-day period immediately after signing
the merger agreement, NuCO
2
may
actively solicit
additional
offers. Once this “go shop” period ends, NuCO
2
still
has
the ability to continue discussions with persons who have made an
acquisition
proposal and with whom it is engaged in discussions as of the expiration
of the
“go-shop” period, subject to certain terms laid out in the merger
agreement. In addition, NuCO
2
may
respond to any unsolicited offers, in accordance with the terms and
conditions
of the merger agreement. Details of the circumstances leading up to
the transaction will be available in the definitive proxy statement,
which will
subsequently be filed with the SEC.
Question:
How can the merger agreement be terminated and what are the termination
fees?
Answer: The
merger agreement may be terminated under certain circumstances, including
(i) if
the Board of Directors of the Company withdraws or modifies its recommendation
of the merger agreement or (ii) the Company accepts a superior third-party
proposal. In connection with these events, the Company must pay
Aurora (a) a $15.0 million fee if the acquisition proposal forming
the basis for
termination is from a party that made its proposal during the “go shop” period
and the termination event occurs by March 29, 2008 and (b) $20.0
million in
other cases. These amounts include any expense
reimbursement.
In
addition, the Company may terminate the merger agreement if, under
certain
limited circumstances involving a breach by Aurora (including the
failure to
obtain its equity financing) or the proposed lenders, Aurora fails
to obtain its
debt financing. Upon such termination, Aurora must pay the Company
a $15.0
million fee, including expenses.
Question: Who
will run the new Company?
Answer:
Michael DeDomenico, our Chief Executive Officer, along with other
members of our
current senior management team will continue to hold such positions
following
the closing of the merger.
Question: Will
jobs be eliminated?
Answer: The
terms of the merger agreement do not call for the elimination of
any
positions. We are not planning any layoffs or
divestures.
Question: How
will the merger affect employee benefits?
Answer: The
merger agreement contemplates that the new privately-held company
will provide
each employee of the Company, at the time the merger becomes effective,
with at
least the same level of base salary, cash incentive compensation
and other cash
variable compensation that was provided to each such employee immediately
prior
to the effectiveness of the merger. In addition, the merger agreement
contemplates that the new privately-held company will provide the
employees with
employee benefits (other than equity-based compensation) that are
no less
favorable, determined in the aggregate on a plan-by-plan basis, than
those
provided to such employees immediately prior to the effectiveness
of the
merger.
Question:
What happens to the 401(k)?
Answer:
The Company intends to continue to offer the 401(k) plan to
associates.
Question:
What happens to the Employee Stock Purchase Plan?
Answer:
The Employee Stock Purchase Plan will be suspended pending the closing
of the
merger and any shares you previously purchased will be cashed out
in the merger
like all other shares. If the merger is not consummated, the Company
will
consider whether to resume the plan. The proxy statement that we
file with the
SEC will contain information for all shareholders on the process
and timing for
surrendering their shares in exchange for the merger consideration.
Question:
Can I sell shares of NuCO
2
stock
or
exercise options?
Answer:
All NuCO
2
associates, as always, are subject to our insider trading
policies. If
you choose, you may exercise any
vested
options
and/or buy or
sell stock on the open market between January 30, 2008 and the closing
date of
the merger (subject to the restrictions of open trading windows that
may apply
to you).
Question: Will
the corporate headquarters remain in Stuart, Florida?
Answer: There
are no plans to relocate the corporate offices.
Question: What
effect will the transaction have on NuCO
2
’s
creditors?
Answer:
The merger agreement will not affect NuCO
2
’s
obligation to pay its debts and other liabilities as they come due.
Question: What
happens to NuCO
2
’s
business
between now and the closing of the merger?
Answer: We
must continue to stay focused and drive our business forward during
this
transition period, as NuCO
2
remains
a
publicly held company until the merger closes. In general, we will
continue to operate our business as normal. The merger agreement does
contain specific operating guidelines for extraordinary transactions,
including
spending and large contract decisions made outside of the ordinary
course of
business. However, we will continue to promote and sell our products
as usual, before and after we close the merger.
We
are
also beginning to draft the proxy statement that will contain important
details
about the Company, Aurora, the proposed merger and related
matters. STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY
WHEN IT IS AVAILABLE, AS IT WILL CONTAIN IMPORTANT INFORMATION
THAT STOCKHOLDERS
SHOULD CONSIDER BEFORE MAKING A DECISION ABOUT THE MERGER. In
addition to receiving the proxy statement from the Company by mail,
stockholders
will also be able to obtain the proxy statement, as well as other
filings
containing information about the Company, without charge, from
the SEC’s website
(http://www.sec.gov) or, without charge, from the Company by contacting
NuCO
2
Inc., Attention, Eric M. Wechsler, General Counsel, 2800
S.E. Market
Place, Stuart, Florida 34997.
The
Company and its directors, executive officers and other members
of management
may be deemed to be participants in the solicitation of proxies
from the
stockholders of the Company in connection with the proposed
transaction. Information about the Company and its directors and
executive officers, and their ownership of the Company’s securities, is set
forth in the Company’s proxy statements and Annual Reports on Form 10-K,
previously filed with the SEC, and will be set forth in the proxy
statement
relating to the merger when it becomes available.
Question:
What has been the reaction in the field?
Answer:
The field reaction has been very positive as the transaction is
viewed as a
growth opportunity for NuCO
2
.