NUCO Nuco2 (MM)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. 1)

Check the appropriate box:

Payment of Filing Fee (Check the appropriate box):

o	No fee required.

o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies: Common Stock, par value $0.001 per share, of NuCO 2 Inc.

(2)

Aggregate number of securities to which transaction applies: 14,813,032 shares of common stock and options to purchase 1,861,570 shares of common stock.

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing is calculated and state how it was determined): The filing fee was determined by multiplying .00003930 by the sum of (i) $444,390,960, which is the product of 14,813,032 outstanding shares of NuCO 2 Inc. common stock and the merger consideration of $30.00 per share and (ii) $17,535,990, which is the product of outstanding options to purchase 1,861,570 shares of NuCO 2 common stock and $9.42, which is the amount equal to the excess of the merger consideration of $30.00 per share over the weighted average exercise price per share of such outstanding options.

(4)

Proposed maximum aggregate value of transaction: $461,926,950

(5)

Total fee paid: $18,154

x	Fee paid previously by written preliminary materials.

o	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 by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

 

(4)

Date Filed:

NuCO 2 INC.

 

2800 S.E. MARKET PLACE

STUART, FLORIDA 34997

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

 

 

Dear Shareholder:

 

At the special meeting, you will be asked to consider and vote on a proposal to approve and adopt the Agreement and Plan of Merger, dated as of January 29, 2008 (the "merger agreement"), by and among NuCO 2 Acquisition Corp. (“Parent”), NuCO 2 Merger Co. (“Merger Sub”) and NuCO 2 Inc.  Parent and Merger Sub are affiliates of Aurora Capital Group, a Los Angeles-based private equity firm.  Subject to the terms and conditions of the merger agreement, Merger Sub will merge with and into us, and we will be the surviving corporation in the merger and a wholly owned subsidiary of Parent.

 

We will not consummate the merger unless our shareholders approve both the merger and the asset transfer.  If, however, our shareholders approve the asset transfer but not the merger, we may elect to consummate the asset transfer and pursue debt financing similar to the financing arranged by Parent in connection with the proposed merger, without completing the merger.

 

The consummation of the merger is subject to customary conditions, including the satisfaction or waiver of the conditions set forth in the debt financing commitment letter from the lender signatory thereto to Parent, which are more fully described in the accompanying proxy statement.

 

Our board of directors, by unanimous action of the independent directors, has determined that the merger agreement and the transactions contemplated thereby (including the merger and the asset transfer) are advisable and in our best interests and the best interests of our shareholders.  Accordingly, the board of directors, by unanimous action of the independent directors, has approved and adopted the merger agreement and the transactions contemplated thereby.   The board of directors, by unanimous action of the independent directors, recommends that you vote “FOR” the approval and adoption of the merger agreement and the approval of the merger, “FOR” the approval of the asset transfer and “FOR” the approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

 

The affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote at the special meeting is required to (1) approve and adopt the merger agreement and approve the merger and (2) approve the asset transfer.

 

 

 

NuCO 2 INC.

 

2800 S.E. MARKET PLACE

STUART, FLORIDA 34997

PROXY STATEMENT

FOR

SPECIAL MEETING OF SHAREHOLDERS

 

 

1.

To approve and adopt the Agreement and Plan of Merger, dated as of January 29, 2008 (the "merger agreement"), by and among NuCO 2 Acquisition Corp. (“Parent”), NuCO 2 Merger Co. (“Merger Sub”) and NuCO 2 Inc. and approve the merger of Merger Sub with and into us, as a result of which (a) we will be the surviving corporation in the merger and a wholly owned subsidiary of Parent and (b) each share of our common stock, other than shares held in our treasury, by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent, or by our shareholders who perfect their appraisal rights under Florida law, will be converted automatically into the right to receive $30.00 in cash, without interest;

 

2.

To approve the transfer of substantially all of our assets to our newly-created, wholly owned subsidiaries, which transfer is referred to in the accompanying proxy statement as the “asset transfer” and which subsidiaries of ours are referred to in the accompanying proxy statement as the “financing subsidiaries;” and

 

3.

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 (a) approve and adopt the merger agreement and approve the merger or (b) approve the asset transfer.

 

 

We will not consummate the merger unless our shareholders approve both the merger and the asset transfer.  If, however, our shareholders approve the asset transfer but not the merger, we may elect to consummate the asset transfer and pursue debt financing similar to the financing arranged by Parent in connection with the proposed merger, without completing the merger.

 

The consummation of the merger is subject to customary conditions, including the satisfaction or waiver of the conditions set forth in the debt financing commitment letter from the lender signatory thereto to Parent, which are more fully described in the accompanying proxy statement.

 

The board of directors, by unanimous action of the independent directors, recommends that you vote “FOR” the approval and adoption of the merger agreement and the approval of the merger, “FOR” the approval of the asset transfer and “FOR” the approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

 

 

All shareholders are cordially invited to attend the special meeting.  Whether or not you expect to attend, please sign and return the enclosed proxy card promptly in the envelope provided or promptly submit your proxy by telephone or over the Internet following the instructions on the proxy card.  You may revoke your proxy and vote in person at the special meeting if you desire.   If you fail to vote in person or by proxy, or abstain from voting, it will have exactly the same effect as voting against approving and adopting the merger agreement and approving the merger and against approving the asset transfer.

 

 

SUMMARY TERM SHEET

 

This summary term sheet highlights selected information from this proxy statement about the proposed transactions contemplated by the merger agreement and the special meeting and may not contain all of the information that is important to you as a shareholder of NuCO 2 Inc.  Accordingly, we encourage you to read carefully this entire document and the other documents to which we refer you.

 

The Companies (page 23)

 

NuCO 2 Inc .

2800 S.E. Market Place

Stuart, Florida 34997

(772) 221-1754

 

NuCO 2 Inc., a Florida corporation, is the leading and only national provider of bulk CO 2 products and services to the U.S. fountain beverage industry.  With service locations within reach of virtually all of the fountain beverage users in the Continental U.S., our experienced professionals comprise the largest network of sales and support specialists in the industry serving national restaurant chains, convenience stores, theme parks and sports and entertainment complexes, among others.  Our revenues are largely derived from the installation, maintenance and rental of bulk CO 2 systems and delivery of beverage grade CO 2 , which are increasingly replacing high pressure CO 2 , until now the traditional method for carbonating fountain beverages.  The technology offers consistent quality, greater ease of operation, and heightened efficiency and safety utilizing permanently installed on-site cryogenic storage tanks.  We provide systems and services that allow our customers to spend more time serving their customers.  Our website is located at www.nuco2.com .  Information on our website is not a part of this proxy statement.

 

NuCO 2 Acquisition Corp.

10877 Wilshire Blvd., Suite 2100

Los Angeles, California 90024

(310) 551-0101

 

NuCO 2 Acquisition Corp., a Delaware corporation, is an affiliate of Aurora Capital Group.  Founded in 1991, Aurora Capital Group currently manages over $2 billion of private equity capital, pursuing two distinct strategies: acquiring healthy middle-market companies through Aurora Equity Partners III and acquiring companies in need of restructuring through Aurora Resurgence Fund, L.P.  Aurora Capital Group’s website is located at www.auroracap.com .  Information on this website is not a part of this proxy statement.

 

NuCO 2 Merger Co.

10877 Wilshire Blvd., Suite 2100

Los Angeles, California 90024

(310) 551-0101

 

  

NuCO 2 Merger Co., a Florida corporation and a wholly owned subsidiary of NuCO 2 Acquisition Corp., was formed solely for the purpose of effecting the merger and the transactions related to the merger agreement.  It has not engaged in any business except in furtherance of this purpose.

 

Financing Subsidiaries

2800 S.E. Market Place

Stuart, Florida 34997

(772) 221-1754

 

The Special Meeting (page 20)

 

Date, Time and Place (page 20)

 

 

 

·

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 (a) approve and adopt the merger agreement and approve the merger or (b) approve the asset transfer.

 

 

           Record Date, Shares Entitled to Vote and Quorum (page 20)

 

Vote Required (page 20)

 

In order to (1) approve and adopt the merger agreement and approve the merger and (2) approve the asset transfer, holders of a majority of the outstanding shares of our common stock entitled to vote must vote in favor of each of these proposals.   If you withhold a vote or abstain from voting on either of these proposals, it will have the same effect as a vote “AGAINST” such proposal.   If a quorum is not present, the approval of the proposal to adjourn the special meeting, if necessary or appropriate, requires the favorable vote of a majority of the outstanding shares of our common stock represented, in person or by proxy, and entitled to vote, at the special meeting.  If a quorum is present, the approval of the proposal to adjourn the special meeting, if necessary or appropriate, requires the favorable vote of a majority of the votes cast for that proposal at the special meeting, in person or by proxy.

 

 

Stockholders’ Agreement (page 76)

 

Voting of Proxies (page 21)

 

After carefully reading and considering the information contained in this proxy statement, you should either complete, date and sign the enclosed proxy card and mail the proxy card in the enclosed return envelope as soon as possible or promptly submit your proxy by telephone or over the Internet following the instructions on the proxy card so that your shares of common stock are represented at the special meeting, even if you plan to attend the special meeting in person.  If you elect to submit your proxy by telephone or via the Internet, you will need to provide the control number set forth on the enclosed proxy card upon which you will be provided the option to vote “for,” “against” or “abstain” with respect to each of the proposals.  If no specification is indicated, all of your shares of common stock represented by valid proxies that have been submitted will be voted “FOR” the approval and adoption of the merger agreement and the approval of the merger, “FOR” the approval of the asset transfer and “FOR” the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Revocability of Proxies (page 22)

 

Until your proxy is voted at the special meeting, you can revoke your proxy and change your vote in any of the following ways:

 

 

·

by properly submitting another proxy by mail, telephone or the Internet, with a later date; or

 

 

Your attendance at the special meeting will not in and of itself constitute a revocation of your proxy.

 

If you have instructed your broker or other nominee to vote your shares, you must follow the procedures provided by your broker or nominee to change those instructions.

 

The Transactions (page 23)

 

Consideration to Be Received by Our Shareholders (page 58)

 

If the merger agreement is approved and adopted, the merger is approved and the asset transfer is approved by our shareholders and the other conditions to closing are satisfied or waived, Merger Sub will merge with and into us, and we will be the surviving corporation in the merger and a wholly owned subsidiary of Parent.  At the effective time, each share of our common stock, other than shares held in our treasury, by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent, or by our shareholders who perfect their appraisal rights under Florida law, will be converted automatically into the right to receive $30.00 in cash, without interest, which we refer to in this proxy statement as the “merger consideration.”

 

 

In connection with the proposed financing of the merger, subject to the approval of our shareholders, we will engage in the asset transfer to our financing subsidiaries.  We will retain, directly or indirectly, 100% ownership of the financing subsidiaries, which will become indirect subsidiaries of Parent upon completion of the merger.  Our shareholders will not receive any consideration as a result of the asset transfer.

 

We will not consummate the merger unless our shareholders approve both the merger and the asset transfer.  If, however, our shareholders approve the asset transfer but not the merger, we may elect to consummate the asset transfer and pursue debt financing similar to the financing arranged by Parent in connection with the proposed merger, without completing the merger.

 

As a result of the transactions, Parent will acquire our entire company.  Following the completion of the transactions, we will no longer be a public company, and you will cease to have any ownership interest in us and will not participate in any of our future earnings and growth or losses.

 

Reasons for the Transactions (page 31)

 

Our board of directors, by unanimous action of the independent directors, has determined to recommend the approval and adoption of the merger agreement and the approval of the transactions based on its consideration of a number of factors, which are described in the section of this proxy statement entitled “The Transactions—Reasons for the Transactions.”  Our board of directors is comprised of six directors, five of whom are independent, with Michael E. DeDomenico, our Chairman and Chief Executive Officer, being the sole management member.

 

Recommendation of the Board of Directors (page 34)

 

After careful consideration, the board of directors, by unanimous action of the independent directors, has determined that the merger agreement and the transactions are advisable and in our best interests and the best interests of our shareholders and has approved and adopted the merger agreement and approved the transactions.   The board of directors, by unanimous action of the independent directors, recommends that you vote “FOR” the approval and adoption of the merger agreement and the approval of the merger, “FOR” the approval of the asset transfer and “FOR” the approval of the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Opinion of Houlihan Lokey Howard & Zukin Financial Advisors, Inc. (page 34)

 

Houlihan Lokey Howard & Zukin Financial Advisors, Inc., or “Houlihan Lokey,” rendered an oral opinion to the board of directors during the meeting at which the merger agreement was approved and adopted (which was confirmed in writing by delivery of Houlihan Lokey’s written opinion dated January 29, 2008), to the effect that the consideration to be received by the holders of our common stock in the merger, other than those holders of our common stock who (i) Parent allows to retain an interest in us, (ii) receive an interest in Parent, or (iii) otherwise participate in the merger through some form of equity ownership, was fair, from a financial point of view, to those holders, as of that date and based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion.

 

Houlihan Lokey’s opinion was directed to the board of directors and only addressed the fairness from a financial point of view of the consideration to be received by the holders of our common stock in the merger, other than those holders of our common stock who (i) Parent allows to retain an interest in us, (ii) receive an interest in Parent, or (iii) otherwise participate in the merger through some form of equity ownership, and does not address any other aspect or implication of the merger. The summary of Houlihan Lokey’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex B to this proxy statement and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in preparing its opinion.  We encourage our shareholders to carefully read the full text of Houlihan Lokey’s written opinion.  However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to the board of directors or any shareholder as to how to act or vote with respect to the merger or related matters. See “The Transactions – Opinion of Houlihan Lokey Howard & Zukin Financial Advisors, Inc.”

 

 

Background of the Transactions (page 23)

 

The section of the proxy statement entitled “The Transactions—Background of the Transactions” contains a description of the process that we undertook with respect to reaching a definitive merger agreement with Parent and Merger Sub, and includes a discussion of our contacts and discussions with Parent and its affiliates that led to the merger agreement.

 

Financing for the Transactions; Source and Amounts of Funds (page 42)

 

The consummation of the merger is subject to the satisfaction or waiver of the conditions set forth in the debt financing commitment letter from the lender signatory thereto to Parent and the condition that the lender not hold back amounts that otherwise would have been funded under the terms of the debt financing commitment letter.

 

Material United States Federal Income Tax Consequences (page 47)

 

Holders of our common stock that exchange all of their shares of our common stock for cash (either pursuant to the merger agreement or as a result of perfecting their appraisal rights under Florida law) will recognize gain or loss on the exchange in an amount equal to difference between the amount of the cash received and that holder’s adjusted tax basis in the shares of our common stock exchanged therefor.

 

Interests of Certain Persons in the Transactions (page 50)

 

When considering our board of directors’ recommendation that our shareholders vote in favor of the approval and adoption of the merger agreement and the approval of the transactions, you should be aware that our directors and executive officers have interests in the transactions that are different from, or in addition to, the interests of our shareholders.  See “The Transactions—Interests of Certain Persons in the Transactions” for a description of such interests that may be different from, or in addition to, the interests of our shareholders.

 

   

Appraisal or Dissenters’ Rights (page 55)

 

The Merger Agreement (page 58)

 

Structure of the Merger (page 58)

 

Subject to the terms and conditions of the merger agreement, Merger Sub will merge with and into us, and we will be the surviving corporation in the merger.  As a result of the merger, we will become a wholly owned subsidiary of Parent, and we will cease to be a publicly traded company.

 

Consideration to be Received by our Shareholders in the Merger (page 58)

 

At the effective time, each share of our common stock, other than shares held in our treasury, by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent, or by our shareholders who perfect their appraisal rights under Florida law, will be converted automatically into the right to receive the merger consideration of $30.00 in cash, without interest.  All shares of our common stock held in our treasury or by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent will automatically be cancelled and no payment will be made in respect of those shares.

 

Treatment of Stock Options (page 59)

 

Each holder of an option to purchase shares of our common stock that is outstanding and unexercised as of the effective time and has an exercise price per share that is less than the merger consideration will receive, in exchange for the cancellation of such stock option, an amount in cash (subject to any applicable withholding taxes) equal to the product of (1) the difference between the merger consideration and the applicable exercise price per share of such stock option, and (2) the aggregate number of shares of common stock issuable upon exercise of such stock option.  No consideration will be paid in respect of any stock options for which the exercise price equals or exceeds $30.00 per share.

 

Solicitation (page 64)

 

During the period beginning on the date of the merger agreement and continuing until 11:59 p.m., New York City time, on March 14, 2008 (the “Go Shop Period End Date”), the Company and its representatives had the right, acting under the direction of the board of directors, to directly or indirectly:

 

·

initiate, solicit and encourage Acquisition Proposals, including by way of public disclosure and by way of providing access to non-public information to any person; and

 

·

enter into and maintain, or participate in, discussions or negotiations with respect to Acquisition Proposals.

 

From the Go-Shop Period End Date until the effective time or, if earlier, the termination of the merger agreement in accordance with its terms, the Company may not, and must use commercially reasonable efforts to cause its representatives not to, directly or indirectly, subject to specified exceptions discussed below:

 

·

initiate, solicit or encourage (including by way of providing non-public information) the submission of any Acquisition Proposal or engage in any discussions or negotiations with respect thereto; or

 

·

approve or recommend, or publicly propose to approve or recommend, an Acquisition Proposal or enter into any merger agreement, letter of intent, agreement in principle, share purchase agreement, asset purchase agreement or share exchange agreement, option agreement or other similar agreement providing for or relating to an Acquisition Proposal or consummate any such transaction or enter into any agreement or agreement in principle requiring the Company to abandon, terminate or fail to consummate the merger or resolve or agree to do any of the foregoing.

 

Neither the board of directors nor any committee of the board of directors may directly or indirectly withdraw or modify in a manner adverse to Parent or Merger Sub, or publicly propose to withdraw or modify in a manner adverse to Parent or Merger Sub, its recommendation in favor of the merger.  However, at any time prior to obtaining the required shareholder approval of the merger agreement, if the Company receives an Acquisition Proposal (including from an Excluded Party) after the date of the merger agreement and the board of directors concludes in good faith, after consultation with its outside financial and legal advisors, that the Acquisition Proposal constitutes a Superior Proposal and that the failure to withdraw or modify its approval of the merger agreement or its recommendation that the Company’s shareholders adopt the merger agreement and approve the merger would be inconsistent with the fulfillment of its fiduciary duties, the board of directors may

 

·

cause the Company to terminate the merger agreement to concurrently enter into a definitive agreement with respect to the Superior Proposal, and/or

 

·

withdraw or modify its approval of the merger agreement or its recommendation that the Company’s shareholders adopt the merger agreement and approve the merger.

 

The Company may not terminate the merger agreement as provided above, unless concurrently with the termination the Company pays the Termination Fee payable pursuant to the merger agreement, as described below under “Fees and Expenses.”  In addition, the Company may not terminate the merger agreement as provided above and the board of directors may not effect a withdrawal or modification of its approval of the merger agreement unless the Company provides Parent a four-business day period in which to negotiate a Superior Proposal.

 

As used in the merger agreement, “Acquisition Proposal” means any inquiry, offer or proposal (other than from Parent or Merger Sub or their respective affiliates) concerning any (A) merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company, (B) direct or indirect sale, lease, pledge or other disposition of assets or business of the Company representing 20% or more of the revenues, net income or assets of the Company, in a single transaction or a series of related transactions, (C) issuance, sale or other disposition by the Company to any person or group (other than Parent or Merger Sub or any of their respective affiliates) of securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 20% or more of the voting power of the Company, or (D) transaction or series of related transactions in which any person or group (other than Parent or Merger Sub or their respective affiliates) acquires beneficial ownership, or the right to acquire beneficial ownership, of 20% or more of the outstanding equity interests of the Company.

 

As used in the merger agreement, “Superior Proposal” means any written Acquisition Proposal that the board of directors determines in its good faith judgment (after consultation with its outside legal and financial advisors) is more favorable to the Company’s shareholders (in their capacity as such), taking into account all relevant legal, financial, regulatory and other aspects of the proposal and the person making the proposal, than the merger agreement (considering any changes to the merger agreement agreed in writing by Parent in response thereto) and which the board of directors determines in good faith is reasonably likely to be consummated.  For purposes of the definition of “Superior Proposal”, the references to “20% or more” in the definition of Acquisition Proposal are deemed to be references to “50%.”

 

Conditions to the Merger (page 70)

 

The obligations of each of Parent, Merger Sub and the Company to consummate the merger are subject to the satisfaction or waiver (where permissible), at or prior to the effective time, of the following conditions:

 

·

the merger agreement shall have been adopted and, to the extent required, the transactions shall have been approved by the requisite vote of the shareholders of the Company in accordance with the FBCA and the governing documents of the Company.

 

·

the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall have expired or been terminated.

 

·

no governmental authority in the United States shall have enacted, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) that is then in effect and has the effect of making the merger illegal or otherwise preventing or prohibiting consummation of the merger.

 

The obligations of Parent and Merger Sub to consummate the merger are subject to the satisfaction or waiver (where permissible), at or prior to the effective time, of the following additional conditions at or prior to the effective time:

 

 

·

the Company shall have performed, in all material respects, all obligations and complied with, in all material respects, its agreements and covenants to be performed or complied with by it under the merger agreement on or prior to the effective time.

 

·

the Company shall have delivered to Parent a certificate, dated the date of the closing of the merger, signed by any executive officer of the Company, certifying in that capacity but not as an individual as to the satisfaction of the preceding two conditions.

 

·

the holders of not more than 10% of the Company’s common stock outstanding immediately prior to the effective time shall have properly exercised appraisal rights in accordance with applicable law.

 

·

the conditions set forth in the debt financing commitment letter shall have been satisfied or waived.

 

·

no portion of the Senior Holdback Amount or the Subordinated Holdback Amount shall be required to be held in a collateral account by the Indenture Trustee (as such terms are defined in the debt financing commitment letter as in effect as of the date of the merger agreement) as of the effective time.

 

·

Parent and Merger Sub shall have performed, in all material respects, all obligations or complied with, in all material respects, all agreements and covenants to be performed or complied with by them under the merger agreement on or prior to the effective time.

 

·

Parent shall have delivered to the Company a certificate, dated the date of the closing of the merger, signed by any executive officer of Parent, certifying in that capacity but not as an individual as to the satisfaction of the preceding two conditions.

 

·

Parent shall have deposited with the paying agent, for the benefit of the holders of the shares, cash in an amount sufficient to pay the aggregate merger consideration.

 

Termination of the Merger Agreement (page 71)

 

The merger agreement may be terminated and the merger and the other transactions may be abandoned at any time prior to the effective time, notwithstanding any requisite approval and adoption of the merger agreement and the merger (the date of any such termination, the “Termination Date”) as follows:

 

(a)

By mutual written consent of each of Parent, Merger Sub and the Company duly authorized by the boards of directors of Parent, Merger Sub and the Company;

 

(b)

By either Parent, Merger Sub or the Company, by written notice (delivered no earlier than the day following the Outside Date), if the effective time shall not have occurred on or before May 31, 2008 (the “Outside Date”).  However, if the termination date of the debt financing commitment is extended past May 31, 2008, the Outside Date will be extended to the same date without any further action of the parties.  The right to terminate the merger agreement under this paragraph (b) will not be available to any party whose failure to fulfill any obligation under the merger agreement has been the cause of, or resulted in, the failure of the merger to be consummated on or before the Outside Date;

 

(c)

By either Parent, Merger Sub or the Company, by written notice, if any governmental authority shall have enacted, issued, promulgated, enforced or entered any order or applicable law that is, in each case, then in effect and is final and nonappealable and has the effect of preventing or prohibiting the consummation of the merger. The right to terminate the merger agreement under this paragraph (c) will not be available to any party whose failure to fulfill any obligation under the merger agreement has been the cause of, or resulted in, any such order to have been enacted, issued, promulgated, enforced or entered;

 

(d)

By written notice of Parent or Merger Sub if any of the following actions or events occur and whether or not they are permitted by the terms of the merger agreement:

 

 

·

the board of directors shall have recommended to the shareholders of the Company an Acquisition Proposal or shall have resolved or publicly proposed to do so or shall have entered into any letter of intent or similar document or any contract accepting any Acquisition Proposal,

(e)

By written notice of Parent or Merger Sub (if Parent is not in material breach of its obligations or its representations and warranties under the merger agreement), if there has been a breach by the Company of any representation, warranty, covenant or agreement contained in the merger agreement, or if any representation or warranty of the Company shall have become untrue, in either case that would result in a failure of a condition related to the Company’s representations, warranties or covenants (a “Terminating Company Breach”).  However, if a Terminating Company Breach is reasonably curable by the Company within 20 days after the occurrence of the Terminating Company Breach through the exercise of its commercially reasonable efforts and for as long as the Company continues to exercise its commercially reasonable efforts, Parent may not terminate the merger agreement under this paragraph until the earlier of the expiration of the 20-day period and the Outside Date;

 

(f)

By written notice of the Company (if the Company is not in material breach of its obligations or its representations and warranties under the merger agreement), if there has been a breach by Parent of any representation, warranty, covenant or agreement contained in the merger agreement, or if any representation or warranty of Parent shall have become untrue, in either case that would result in a failure of a condition related to Parent’s representations, warranties or covenants (a “Terminating Parent Breach”).  However, if a Terminating Parent Breach is reasonably curable by Parent within 20 days of the occurrence of the Terminating Parent Breach through the exercise of its commercially reasonable efforts and for as long as Parent continues to exercise its commercially reasonable efforts, the Company may not terminate the merger agreement under this paragraph until the earlier of the expiration of the 20-day period and the Outside Date;

 

(g)

By written notice of the Company in accordance with the solicitation provisions of the merger agreement, if the Company shall have concurrently entered into a definitive agreement with respect to a Superior Proposal and paid the Termination Fee payable pursuant to the merger agreement, as described below under “Fees and Expenses;”

 

 

 

 

and, in the case of either (1) or (2), the failure is either primarily caused by, or primarily results from:

(i)

By written notice of Parent, Merger Sub or the Company, if, at the special meeting (including any adjournment thereof), the Company’s shareholders do not adopt the merger agreement or approve the transactions.

 

Effect of Termination of the Merger Agreement (page 73)

 

Subject to the fee and expense payment provisions described below, in the event of the termination of the merger agreement in accordance with its terms, the merger agreement will become void, and there will be no liability on the part of any party or any of their respective affiliates or the directors, officers, employees, agents or representatives of any of them, and all rights and obligations of each party will cease, except:

 

 

·

in the case of a termination of the merger agreement as a result of a Terminating Company Breach or a Terminating Parent Breach arising out of an inaccuracy in any representation as of the date of the merger agreement or a breach of any warranty or covenant, the breaching party is required to reimburse the terminating party for its reasonable, documented Transaction Costs (as defined below), up to a maximum amount of $5,000,000 (the “Expense Reimbursement Amount”), within 10 business days of receipt of a reasonably detailed accounting of those expenses, and the breaching party will not have any other liability under the merger agreement except in the case of a willful breach or as provided in “Fees and Expenses” below; and

 

·

in the case of a willful breach of any representation, warranty or covenant, Parent, Merger Sub and the Company agreed that the damages suffered or to be suffered by the Company, in the case of a willful breach of the merger agreement by Parent or Merger Sub, or by Parent and Merger Sub, in the case of a willful breach of the merger agreement by the Company, will not be limited to the Expense Reimbursement Amount and may include the benefit of the bargain of the merger to the terminating party (and, in the case of the Company, its shareholders), adjusted to account for the time value of money.  However, Parent and Merger Sub are thinly capitalized acquisition entities and the Limited Guaranty, which is described below, pursuant to which Aurora Equity Partners III, L.P. and Aurora Overseas Equity Partners III, L.P. (each, a “Guarantor” and, collectively, the “Guarantors”) unconditionally agreed to guarantee the obligations of Parent and Merger Sub under the merger agreement, limits the liability of the Guarantors to $35.0 million.

 

(1)

Parent or Merger Sub pursuant to paragraph (d) under “Termination of the Merger Agreement” above (if Parent or Merger Sub is not then in material breach of any of its obligations, representations or warranties under the merger agreement);

 

 

(3)

Parent or Merger Sub:

 

 

·

pursuant to paragraph (e) under “Termination of the Merger Agreement” above and, at any time after the date of the merger agreement and prior to the Terminating Company Breach giving rise to the right of Parent or Merger Sub to terminate the merger agreement, an Acquisition Proposal shall have been publicly disclosed or otherwise become generally known to the public or communicated to the senior management or the board of directors of the Company and not withdrawn or terminated; or

 

·

pursuant to paragraph (i) under “Termination of the Merger Agreement” above and, at any time after the date of the merger agreement and prior to the vote of the Company’s shareholders seeking approval of the merger at the special meeting, an Acquisition Proposal shall have been publicly disclosed or otherwise become generally known to the public and not withdrawn or terminated;

 

and, in any of these three cases, within nine months after the date of termination, the Company enters into a definitive agreement with respect to or consummates an Acquisition Proposal (whether or not the Acquisition Proposal was made prior to termination of the merger agreement or by the same person) (for the purposes of this paragraph (3), the references to “20%” in the definition of “Acquisition Proposal” shall be deemed to be references to “more than 50%”):

 

then the Company is required to pay Parent the Termination Fee in immediately available funds:

 

 

·

concurrently with termination, in the case of paragraph (2) above; and

 

·

upon the earlier of entry into the definitive agreement with respect to, or consummation of, the Acquisition Proposal, in the case of paragraph (3) above, with a credit for any Expense Reimbursement Amount previously paid by the Company as a result of a Terminating Company Breach.

 

Termination Fee Payable by Parent

 

Parent agreed that if the merger agreement is terminated by the Company pursuant to paragraph (h) under “Termination of the Merger Agreement” above, then Parent is required to pay the Company the Reverse Termination Fee of $15,000,000 in immediately available funds within two business days after the Termination Date.

 

Limited Guaranty (page 76)

 

Concurrently with the execution of the merger agreement, and as a condition to the willingness of the Company to enter into the merger agreement, the Guarantors entered into a Limited Guaranty (the “Guaranty”) with the Company pursuant to which, among other things, each Guarantor unconditionally agreed to guarantee, on a several, and not joint, basis as set forth in the Guaranty, all of the obligations of Parent and Merger Sub under the merger agreement, up to a maximum amount equal to their pro rata share of $35.0 million.  The Guarantors are affiliates of Aurora.  The Guaranty terminates on the earlier to occur of (a) the indefeasible payment and performance in full of all obligations of Parent and Merger Sub under the merger agreement, (b) the termination of the merger agreement in accordance with its terms, and only if neither Merger Sub nor Parent has any liability or financial obligation to the Company that survives such termination or (c) consummation of the merger.

 

The Asset Transfer (page 78)

 

Although the Company contemplates that, subject to the approval of the Company’s shareholders, it will engage in the asset transfer in connection with the proposed debt financing for the merger, the documentation setting forth the terms and conditions of the asset transfer has not been finalized, and as a result, the exact terms and conditions of the asset transfer may differ from those described above.

 

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE TRANSACTIONS

 

The following questions and answers briefly address some commonly asked questions regarding the special meeting, the merger agreement and the transactions.  These questions and answers may not address all questions that may be important to you.  Please refer to the more detailed information contained elsewhere in this proxy statement, the appendices to this proxy statement and the other documents we refer to in this proxy statement.

 

Q.	Why are our shareholders receiving these materials?

A.	Our board of directors is sending these proxy materials to provide our shareholders with information about the merger agreement and the transactions so that they may determine how to vote their shares in connection with the special meeting.

 

Q.	When and where is the special meeting?

A.	The special meeting will be held on Thursday, May 8, 2008 at 10:00 a.m., Eastern Time, at the Hutchinson Island Marriott Beach Resort and Marina, 555 N.E. Ocean Boulevard, Stuart, Florida 34996.

 

Q.	Who is soliciting my proxy?

A.	This proxy is being solicited by our board of directors.

 

Q.	Who is paying for the solicitation of proxies?

A.

We will bear the cost of solicitation of proxies by us. In addition to soliciting shareholders by mail, our directors, officers and employees, without additional remuneration, may solicit proxies in person or by telephone or other means of electronic communication. We will not pay these individuals for their solicitation activities but will reimburse them for their reasonable out-of-pocket expenses. Brokers and other custodians, nominees and fiduciaries will be requested to forward proxy-soliciting material to the owners of stock held in their names, and we will reimburse such brokers and other custodians, nominees and fiduciaries for their reasonable out-of-pocket costs. Solicitation by our directors, officers and employees may also be made of some shareholders in person or by mail, telephone or other means of electronic communication following the original solicitation. In addition, we have retained MacKenzie Partners, Inc. to assist in the solicitation of proxies.

 

Q.	What matters will we vote on at the special meeting?

A.            You will vote on proposals to:

 

 

·

approve the asset transfer; and

 

·

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 (a) approve and adopt the merger agreement and approve the merger or (b) approve the asset transfer.

 

 

Q.	How does our board of directors recommend I vote on the proposals?

A.	Our board of directors recommends that you vote:

 

 

·

“FOR” the approval of the asset transfer; and

 

·

“FOR” the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Q.	What are the required votes for the proposals?

A.

In order to (1) approve and adopt the merger agreement and approve the merger and (2) approve the asset transfer, holders of a majority of the outstanding shares of our common stock entitled to vote must vote in favor of each of these proposals. If you withhold a vote or abstain from voting on either of these proposals, it will have the same effect as a vote “AGAINST” such proposal.   If a quorum is not present, the approval of the proposal to adjourn the special meeting, if necessary or appropriate, requires the favorable vote of a majority of the outstanding shares of our common stock represented, in person or by proxy, and entitled to vote, at the special meeting.  If a quorum is present, the approval of the proposal to adjourn the special meeting, if necessary or appropriate, requires the favorable vote of a majority of the votes cast for that proposal at the special meeting, in person or by proxy.

 

Q.	Are any of the proposals conditioned upon the approval of any other proposal?

A.

We will not consummate the merger unless our shareholders approve both the merger and the asset transfer. If, however, our shareholders approve the asset transfer but not the merger, we may elect to consummate the asset transfer and pursue debt financing similar to the financing arranged by Parent in connection with the proposed merger, without completing the merger.

 

Q.	Who may attend the special meeting?

A.	All of our shareholders who owned shares of our common stock on March 7 , 2008, the record date for the special meeting, may attend.

 

Q.	Who may vote at the special meeting?

A.	Only holders of record of our common stock as of the close of business on March 7, 2008, the record date for the special meeting, may vote at the special meeting.  As of the record date, we had 14,813,032 outstanding shares of our common stock entitled to vote on the transactions.

 

Q.	If my shares are held in “street name” by my broker, will my broker vote my shares for me?

A.

Yes, but your broker will only be permitted to vote your shares of our common stock if you instruct your broker how to vote. You should follow the procedures provided to you by your broker regarding how to instruct your broker to vote your shares. Failure to instruct your broker to vote your shares will have the same effect as voting against the approval and adoption of the merger agreement and the approval of the merger and against the approval of the asset transfer.

 

Q.	What does it mean if I get more than one proxy card?

A.

If your shares are registered in multiple accounts with one or more brokers and/or our transfer agent, you will receive more than one proxy card. If you are submitting your proxy by completing and returning your proxy card, please complete and return each of the proxy cards you receive to ensure that all of your shares are voted.

 

Q.	What is a “quorum”?

A.

A “quorum” will be present at the special meeting with respect to a proposal to be voted on at the meeting if the holders of a majority of the outstanding shares of our common stock entitled to vote on the record date on that proposal are represented in person or by proxy.  This quorum of our shares must be present at the special meeting, in person or by proxy, in order for the special meeting to be held.  Shares entitled to vote on a proposal at the special meeting and present by proxy will be counted as present for purposes of determining the presence of a quorum with respect to that proposal even if the proxy does not have authority to vote on all matters.

 

Q.	What happens if I withhold my vote or abstain from voting?

A.

If you withhold a vote or abstain from voting on the proposal for the approval and adoption of the merger agreement and the approval of the merger or the proposal for the approval of the asset transfer, it will have the same effect as a vote “AGAINST” such proposal.   If a quorum is not present, the approval of the proposal to adjourn the special meeting, if necessary or appropriate, requires the favorable vote of a majority of the outstanding shares of our common stock represented, in person or by proxy, and entitled to vote, at the special meeting, and, therefore, withholding a vote or abstaining from voting on the proposal to adjourn the special meeting in this case will have the same effect as a vote “AGAINST” the proposal.  If a quorum is present, the approval of the proposal to adjourn the special meeting, if necessary or appropriate, requires the favorable vote of a majority of the votes cast for that proposal at the special meeting, in person or by proxy, and, therefore, withholding a vote or abstaining from voting in this case will have no effect on the proposal to adjourn the special meeting.

 

Q.	Will my shares be voted if I do not provide my proxy?

A.

Under stock market rules currently in effect, brokerage firms and nominees have the authority to vote their customers’ unvoted shares on certain “routine” matters if the customers have not furnished voting instructions within a specified period prior to the special meeting.  However, the proposals to be voted upon at the special meeting are not considered “routine” matters and hence brokerage firms and nominees will not be able to vote the shares of customers from whom they have not received voting instructions.  If you hold your shares directly in your own name, they will not be counted as shares present for the purposes of determining the presence of a quorum or be voted if you do not provide a proxy or attend the special meeting and vote the shares yourself.

 

Broker non-votes occur when shares held by a broker are not voted with respect to a proposal because (1) the broker has not received voting instructions from the beneficial owner of the shares and (2) the broker lacks the authority to vote the shares at the broker’s discretion.  Broker non-votes will be counted as shares present and entitled to vote for the purposes of determining the presence of a quorum on each of the proposals to be voted on at the special meeting.  With regard to the proposal to approve and adopt the merger agreement and the proposal to approve the asset transfer, the shares represented by broker non-votes will have the same effect as a vote “AGAINST” these proposals because holders of a majority of the outstanding shares of our common stock entitled to vote must vote in favor of the approval and adoption of the merger agreement and the approval of the asset transfer in order for each of these proposals to be approved.  If a quorum is not present, the shares represented by broker non-votes will have the same effect as a vote “AGAINST” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies because holders of a majority of the outstanding shares of our common stock represented, in person or by proxy, and entitled to vote, at the special meeting must vote in favor of adjournment in order for this proposal to be approved.  If a quorum is present, broker non-votes will have no effect on the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies because broker non-votes will not be considered votes cast.

 

Q.	If I have given a proxy, may I change my vote?

A.	Yes. Until your proxy is voted at the special meeting, you can revoke your proxy and change your vote in any of the following ways:

 

 

 

 

Your attendance at the special meeting will not in and of itself constitute a revocation of your proxy.

 

If you have instructed a broker or other nominee to vote your shares, you must follow the procedures provided by your broker or nominee to change those instructions.

 

Q.	What are the proposed transactions?

A.	Subject to the terms and conditions of the merger agreement, Merger Sub will merge with and into us, and we will be the surviving corporation in the merger and a wholly owned subsidiary of Parent.

 

In connection with the proposed financing of the merger, subject to the approval of our shareholders, we will engage in the asset transfer to our financing subsidiaries.  We will retain, directly or indirectly, 100% ownership of the financing subsidiaries, which will become indirect subsidiaries of Parent upon completion of the merger.

 

We will not consummate the merger unless our shareholders approve both the merger and the asset transfer.  If, however, our shareholders approve the asset transfer but not the merger, we may elect to consummate the asset transfer and pursue debt financing similar to the financing arranged by Parent in connection with the proposed merger, without completing the merger.

 

As a result of the transactions, Parent will acquire our entire company and we will cease to be a publicly traded company.

 

Q.	If the transactions are completed, what will I be entitled to receive for my shares and when will I receive it?

A.

At the effective time, each share of our common stock, other than shares held in our treasury, by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent, or by our shareholders who perfect their appraisal rights under Florida law, will be converted automatically into the right to receive the merger consideration of $30.00 in cash, without interest.  All shares of our common stock held in our treasury or by Parent, Merger Sub or any direct or indirect wholly owned subsidiary of Parent will automatically be cancelled and no payment will be made in respect of those shares.

 

Shareholders will not receive any consideration as a result of the asset transfer.

 

After the effective time, we will arrange for a letter of transmittal to be sent to each of our shareholders.  The merger consideration will be paid to each shareholder once that shareholder submits a properly completed and duly executed letter of transmittal, properly endorsed stock certificates and any other required documentation.

 

Q.	Am I entitled to appraisal rights?

A.

Yes.  In order to exercise your appraisal rights, you must follow the requirements of Florida law.  Under Florida law, holders of our common stock who do not vote (or cause or permit to be voted) any of their shares of our common stock in favor of approving and adopting the merger agreement and approving the merger will have the right to seek appraisal and to obtain payment of the fair value of their shares if the merger is completed, but only if they submit a written notice of their intent to demand payment prior to the vote on the merger agreement at the special meeting and they comply with the procedures and requirements under Sections 607.1301 through 607.1333 of the FBCA, which are summarized in this proxy statement.  A copy of Sections 607.1301 through 607.1333 of the FBCA is included as Annex C to this proxy statement and a description of these provisions can be found along with additional information about appraisal rights under the section entitled “The Transactions—Appraisal or Dissenters’ Rights.”

 

Q.	Will the merger be taxable to me?

A.

Yes.  The exchange of your shares of our common stock for cash will be taxable to you.  You will recognize gain or loss for federal income tax purposes in an amount equal to the difference between the cash you receive (either as merger consideration of $30.00 per share or as a result of perfecting your appraisal rights under Florida law) and your adjusted tax basis in your shares of our common stock exchanged therefor.  You will not recognize any gain or loss for federal income tax purposes as a result of the asset transfer.

 

See the section entitled “The Transactions—Material United States Federal Income Tax Consequences” for a more detailed explanation of the tax consequences of the merger.  You should consult your tax advisor on how specific tax consequences of the merger apply to you.

 

Q.	Is the merger subject to the satisfaction of any conditions?

A.

Yes. In addition to shareholder approval, the merger is subject to the satisfaction or waiver of other customary conditions, including the satisfaction or waiver of the conditions set forth in the debt financing commitment letter. For a description of these conditions, please see the sections entitled “The Transactions—Financing for the Transactions; Source and Amount of Funds” and “The Merger Agreement—Conditions to the Merger.”

Q.	What happens if I sell my shares of common stock before the special meeting?

A.

The record date for the special meeting is March 7, 2008 , which is earlier than the date of the special meeting.  If you held your shares of our common stock on the record date for the special meeting, you will retain your right to vote at the special meeting.  If you transfer your shares of our common stock after the record date for the special meeting but prior to the date on which the merger is consummated, you will lose the right to receive the merger consideration for the shares of our common stock you have sold.  The right to receive the merger consideration will pass to the person who owns your shares of our common stock when the merger is consummated.

 

Q.	When do you expect to complete the transactions?

A.

We are working toward completing the transactions as quickly as possible. We currently expect to complete the transactions as soon as possible after the special meeting and after all applicable conditions are satisfied or waived. In order to complete the transactions, we must obtain shareholder approval and the other closing conditions under the merger agreement must be satisfied or waived. See “The Transactions—Financing for the Transactions; Source and Amount of Funds” and “The Merger Agreement—Conditions to the Merger.”

 

Q.	What happens to NuCO 2 Inc. if the merger agreement is not approved and adopted?

A.

If the merger agreement is not approved and adopted and the asset transfer is not approved, the merger will not be consummated and our shareholders will not receive any payment for their shares. We will remain an independent public company, and we would expect to be operated by management in a manner similar to that in which we are being operated today. If, however, our shareholders approve the asset transfer but not the merger, then, in an effort to provide value to our shareholders, we may elect to consummate the asset transfer and pursue debt financing similar to the financing arranged by Parent in connection with the proposed merger, without completing the merger. In this event, we would also expect to be operated by management in a manner similar to that in which we are being operated today, with the primary difference being that our business would be conducted, in a highly leveraged capital structure, through our wholly owned financing subsidiaries rather than at the parent company level.  We do not currently anticipate that we would pursue this debt financing under these circumstances, but could determine otherwise in the furutre.  Shareholders will not receive any consideration as a result of the asset transfer itself. See “The Transactions—Certain Effects on the Company if the Transactions are Not Completed.”

 

Q.	After the special meeting, how can I determine whether the proposals to approve and adopt the merger agreement and approve the asset transfer have been approved by our shareholders?

A.	Promptly after the special meeting, we anticipate that we will issue a press release announcing whether the proposals to approve and adopt the merger agreement and approve the asset transfer have been approved by holders of a sufficient number of outstanding shares of our common stock.

 

Q.	Should I send in my stock certificates now?

A.

No. After the effective time, you will receive written instructions informing you how to send in your stock certificates in order to receive the merger consideration. You will receive your cash payment as soon as practicable after receipt of the stock certificates representing the shares of our common stock that you own, together with the properly completed documents requested in the instructions. PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY CARD.