OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ZING TECHNOLOGIES, INC.
AT
$15.36 NET PER SHARE
BY
IRC ACQUISITION CORPORATION
A DIRECT WHOLLY-OWNED SUBSIDIARY OF
INTERNATIONAL RECTIFIER CORPORATION
----------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MARCH 6, 2000, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
THIS OFFER IS BEING MADE IN ACCORDANCE WITH AN AGREEMENT AND PLAN OF
REORGANIZATION (THE "MERGER AGREEMENT"), DATED AS OF JANUARY 27, 2000, BY AND
AMONG ZING TECHNOLOGIES, INC., A NEW YORK CORPORATION (THE "COMPANY"), IRC
ACQUISITION CORPORATION, A NEW YORK CORPORATION (THE "PURCHASER"), AND
INTERNATIONAL RECTIFIER CORPORATION, A DELAWARE CORPORATION ("PARENT"). THE
BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER, THE
MERGER, THE STOCK OPTION AGREEMENT (EACH AS DEFINED BELOW), AND THE PURCHASE OF
SHARES CONTEMPLATED BY THE OFFER AND THE STOCK OPTION AGREEMENT, AND HAS
DETERMINED THAT THE OFFER DESCRIBED HEREIN IS IN THE BEST INTEREST OF THE
COMPANY'S SHAREHOLDERS AND RECOMMENDS THAT ALL SHAREHOLDERS TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF COMMON STOCK, $0.01 PAR VALUE, OF THE COMPANY (THE "SHARES") WHICH
WOULD REPRESENT AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES OF THE COMPANY ON
A FULLY-DILUTED BASIS (THE "MINIMUM CONDITION") AND (2) THE EXPIRATION OR
TERMINATION OF ANY WAITING PERIOD UNDER THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, BEFORE THE EXPIRATION DATE OF THE OFFER.
THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS. SEE
SECTION 14.
IN THE EVENT THAT MORE THAN TWO-THIRDS AND LESS THAN 90% OF THE OUTSTANDING
SHARES OF THE COMPANY ARE TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN, THE
PURCHASER MAY, UNDER CERTAIN CIRCUMSTANCES DESCRIBED BELOW, EXERCISE THE TOP-UP
STOCK OPTION (AS DEFINED BELOW).
THE OFFER IS NOT CONDITIONED UPON PARENT OR THE PURCHASER OBTAINING
FINANCING.
IMPORTANT
ANY SHAREHOLDER DESIRING TO TENDER ALL OR ANY PORTION OF SUCH SHAREHOLDER'S
SHARES SHOULD EITHER:
(I) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF)
IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL AND
(A) MAIL OR DELIVER IT, TOGETHER WITH THE CERTIFICATE(S) EVIDENCING THE
TENDERED SHARES AND ANY OTHER REQUIRED DOCUMENTS, TO THE DEPOSITARY, OR
(B) TENDER SUCH SHARES PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER
SET FORTH IN SECTION 3; OR
(II) REQUEST SUCH SHAREHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST
COMPANY OR OTHER NOMINEE TO EFFECT THE TRANSACTION FOR SUCH SHAREHOLDER.
A SHAREHOLDER WHOSE SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER,
COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE IF SUCH SHAREHOLDER
DESIRES TO TENDER SHARES SO REGISTERED.
A SHAREHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES EVIDENCING
SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY WITH THE
PROCEDURES FOR BOOK-ENTRY TRANSFER DESCRIBED IN THIS OFFER TO PURCHASE ON A
TIMELY BASIS, MAY TENDER SUCH SHARES BY FOLLOWING THE PROCEDURES FOR GUARANTEED
DELIVERY SET FORTH IN SECTION 3.
QUESTIONS AND REQUESTS FOR ASSISTANCE, OR FOR ADDITIONAL COPIES OF THIS
OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL OR OTHER OFFER MATERIALS, MAY BE
DIRECTED TO THE INFORMATION AGENT AT ITS ADDRESS AND TELEPHONE NUMBER SET FORTH
ON THE BACK COVER OF THIS OFFER TO PURCHASE. SHAREHOLDERS MAY ALSO CONTACT
BROKERS, DEALERS, COMMERCIAL BANKS OR TRUST COMPANIES FOR ASSISTANCE CONCERNING
THE OFFER.
FEBRUARY 7, 2000
TABLE OF CONTENTS
PAGE
--------
SUMMARY TERM SHEET....................................................... 1
INTRODUCTION............................................................. 6
THE OFFER................................................................ 8
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE......................... 8
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES............... 11
SECTION 3. PROCEDURE FOR TENDERING SHARES.............................. 12
SECTION 4. WITHDRAWAL RIGHTS........................................... 15
SECTION 5. CERTAIN TAX CONSIDERATIONS.................................. 15
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS............................ 15
SECTION 7. CERTAIN INFORMATION CONCERNING THE COMPANY.................. 16
SECTION 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT..... 18
SECTION 9. SOURCE AND AMOUNT OF FUNDS.................................. 19
SECTION 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.......... 20
SECTION 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; MERGER 23
AGREEMENT; SHAREHOLDER SUPPORT AGREEMENT; STOCK OPTION
AGREEMENT; CONFIDENTIALITY AGREEMENT......................
SECTION 12. DIVIDENDS AND DISTRIBUTIONS................................. 35
SECTION 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ 35
NATIONAL MARKET LISTING AND EXCHANGE ACT REGISTRATION.....
SECTION 14. CERTAIN CONDITIONS OF THE OFFER............................. 36
SECTION 15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.............. 38
SECTION 16. FEES AND EXPENSES........................................... 42
SECTION 17. MISCELLANEOUS............................................... 42
SCHEDULE I ............................................................. S-1
SUMMARY TERM SHEET
IRC Acquisition Corporation is offering to purchase all of the outstanding
common stock of Zing Technologies, Inc. for $15.36 per share in cash. Through a
question and answer format, this Summary Term Sheet will explain to you, the
shareholders of Zing Technologies, Inc., the important terms of the proposed
transaction. This explanation will assist you in deciding whether to tender your
shares to IRC Acquisition Corporation. This Summary Term Sheet serves only as an
introduction, and we urge you to carefully read the remainder of the Offer to
Purchase and the accompanying Letter of Transmittal in order to fully educate
yourself on the details of the proposed transaction. Cross-referenced text
refers to sections within the Offer to Purchase, unless otherwise noted.
WHO IS OFFERING TO BUY THE COMMON STOCK OF ZING TECHNOLOGIES, INC.?
- Our name is IRC Acquisition Corporation. We are a New York corporation
formed for the purpose of making a cash tender offer for all of the
outstanding shares of common stock of Zing Technologies, Inc. ("Zing"). We
are a direct, wholly-owned subsidiary of International Rectifier
Corporation, a Delaware corporation, whose shares are listed on the New
York Stock Exchange. See "Introduction."
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER? HOW MUCH IS
IRC ACQUISITION CORPORATION OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
- We are offering to purchase all of the outstanding shares of common stock
of Zing for $15.36 per share, net to you, in cash. See "Introduction."
WHAT IS THE PURPOSE OF THE TENDER OFFER?
- The purpose of the tender offer is to enable International Rectifier
Corporation to acquire control of Zing. See "Introduction" and Section 11
("Purpose of the Offer; Plans for the Company; Merger Agreement;
Shareholder Support Agreement; Stock Option Agreement; Confidentiality
Agreement").
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
- We are not obligated to purchase any shares that you validly tender unless
the number of shares validly tendered and not withdrawn before the
expiration date of the offer represents, in the aggregate, at least
two-thirds of the outstanding shares of Zing.
- We are also not obligated to purchase any shares which you validly tender
if, among other things:
- Zing and its subsidiary, Omnirel LLC, do not continue to operate their
businesses according to ordinary and past practices,
- there is a material adverse change in Zing, Omnirel LLC or their
businesses, or
- the applicable waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, has not expired or been
terminated.
- We are also not obligated to purchase any shares you validly tender if any
other conditions as set forth in Section 14 ("Certain Conditions to the
Offer") and discussed in Section 1 ("Terms of the Offer; Expiration Date")
are not satisfied or waived.
1
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
- Our offer to purchase your shares expires at 12:00 midnight, New York City
time, on Monday, March 6, 2000. This is called the initial expiration
date. See Section 1 ("Terms of the Offer; Expiration Date").
CAN IRC ACQUISITION CORPORATION EXTEND THE OFFER PAST THIS EXPIRATION DATE AND
UNDER WHAT CIRCUMSTANCES?
- Yes, we can extend the offer past the initial expiration date. If we
choose to do so, you will be able to tender your shares until 12:00
midnight, New York City time, on the new expiration date.
- Several terms, which were negotiated by the parties, define the
circumstances in which we can extend the offer, including:
- if any conditions to the offer have not been satisfied or waived,
- for any period required by a Securities and Exchange Commission
rule or regulation, or
- for ten business days if all conditions are satisfied and shareholders
have tendered more than 67% but less than 90% of the outstanding shares
of common stock of Zing.
- See Section 1 ("Terms of the Offer; Expiration Date").
HOW DO I FIND OUT IF IRC ACQUISITION CORPORATION EXTENDS THE OFFER?
- We will announce an extension no later than 9:00 a.m., New York City time,
on the business day after a scheduled expiration date by issuing a press
release to the Dow ▇▇▇▇▇ News Service. See Section 1 ("Terms of the Offer;
Expiration Date").
HOW DO I GET PAID FOR MY TENDERED SHARES?
- We will pay for the shares accepted for payment by depositing the purchase
price with ChaseMellon Shareholder Services, L.L.C., (who is the
depositary in this offer.) The depositary will act as your agent and will
transmit to you the payment for all shares accepted for payment. See
Section 2 ("Acceptance for Payment and Payment for Shares").
HOW DO I TENDER MY SHARES?
- To tender your shares, you must deliver your share certificates, together
with a completed letter of transmittal, to the depositary on or prior to
the expiration date. If your shares are held in street name, you can
tender the shares by your nominee through The Depository Trust Company.
- If you cannot get all of the documents or instruments that you are
required to deliver to the depositary, you can still tender your shares if
a bank, broker, dealer, credit union, savings association or other entity
which is a member in good standing of a recognized Medallion Signature
Guarantee Program or any other eligible institution guarantees that the
depositary will receive the missing items within three NASDAQ National
Market trading days. For the tender to be valid, the depositary must
actually receive the missing items within that three day period.
- See Section 3 ("Procedure for Tendering Shares").
2
UNTIL WHAT TIME CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
- You can withdraw your tendered shares at any time on or prior to a
scheduled expiration date. After the offer expires, the tender is
irrevocable unless we have not accepted for payment your shares by
April 7, 2000. At and after this date, you can withdraw your tendered
shares until we accept them for payment. See Section 4 ("Withdrawal
Rights").
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
- To withdraw your shares, you must deliver written, telegraphic or
facsimile transmission notice of withdrawal to the depositary that
specifies your name, the number of shares being withdrawn, and the name of
the registered holder of the shares, if different from the person who
tendered the shares. See Section 4 ("Withdrawal Rights").
WHAT ARE THE TAX CONSEQUENCES OF THE SALE OF SHARES TO IRC ACQUISITION
CORPORATION?
- The sale of shares to us is a taxable transaction for federal, and
possibly state, income tax purposes. In general, you will recognize gain
or loss equal to the difference between the tax basis of your shares and
the amount of cash that you receive from us for the shares.
- We encourage you to consult with your own tax advisor about the particular
effect the tender will have on you.
- See Section 5 ("Certain Tax Considerations").
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
- On January 27, 2000, the last full trading day before we announced the
offer, the closing price per share of Zing common stock on the NASDAQ
National Market was $15.00. On February 4, the last full trading day
before we commenced the offer, the closing price per share of Zing common
stock on the NASDAQ National Market was $15.125.
- Between December 31, 1999 and February 4, 2000, the closing sale price of
a share of Zing common stock ranged between $12.00 and $15.906.
- We encourage you to obtain a current market quotation for your shares
before deciding whether to tender your shares.
- See Section 6 ("Price Range of Shares; Dividends").
WHAT IS THE TOTAL AMOUNT OF FUNDS THAT IRC ACQUISITION CORPORATION WILL REQUIRE
TO CONSUMMATE THE PROPOSED TRANSACTION?
- We estimate that International Rectifier Corporation and we will require
approximately $37.5 million to consummate the tender offer and merger. See
Section 9 ("Source and Amount of Funds"). After payment of debt owed by
▇▇▇▇ and Omnirel LLC, we anticipate that Zing will have approximately $9.0
million in cash at the time the offer terminates.
3
DOES IRC ACQUISITION CORPORATION HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
- Yes, we will obtain all necessary funds through capital contributions or
advances by International Rectifier Corporation. International Rectifier
Corporation has sufficient funds from cash and credit agreements to fully
fund the offer and the subsequent merger. International Rectifier
Corporation has received all required approvals from the lenders who fund
these credit agreements. See Section 9 ("Source and Amount of Funds").
IS IRC ACQUISITION CORPORATION'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON
WHETHER TO TENDER SHARES IN THE OFFER?
- We do not think our financial condition is relevant to your decision
whether to tender shares and accept the offer because: the offer consists
solely of cash, the offer is not subject to any financing condition,
International Rectifier Corporation has adequate cash and credit
facilities available, International Rectifier Corporation is a public
reporting company that files reports electronically on ▇▇▇▇▇, and the
offer is for all outstanding shares of Zing's common stock.
WHAT DOES THE ZING BOARD OF DIRECTORS THINK OF THE TENDER OFFER AND MERGER?
- On January 19, 2000, the Board of Directors of Zing unanimously adopted
resolutions determining that the offer, the merger, the merger agreement,
and all other agreements to the tender offer and merger were fair to you
and in your best interests.
- Your Board of Directors recommends that you accept the offer and tender
your shares.
- See "Introduction" and Section 11 ("Purpose of the Offer; Plans for the
Company; Merger Agreement; Shareholder Support Agreement; Stock Option
Agreement; Confidentiality Agreement").
HAVE ANY SHAREHOLDERS ALREADY AGREED TO TENDER THEIR SHARES?
- Yes, shareholders holding shares representing approximately 57% of the
outstanding shares of common stock of Zing entered into Shareholder
Support Agreements in which each has agreed to tender all of his or her
shares in the offer.
- See "Introduction" and Section 11 ("Purpose of the Offer; Plans for the
Company; Merger Agreement; Shareholder Support Agreement; Stock Option
Agreement; Confidentiality Agreement").
IF AT LEAST TWO-THIRDS OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WHAT
HAPPENS TO ZING AFTER THE OFFER?
- International Rectifier Corporation, Zing, and we have entered into a
merger agreement that provides for IRC Acquisition Corporation to merge
with and into Zing. The merger is dependent on shareholders owning at
least two-thirds of Zing's outstanding stock voting in favor of the
transaction. If the tender offer is successful, we will own at least
two-thirds of ▇▇▇▇'s outstanding shares and intend to vote these shares in
favor of the merger.
- Therefore, if we acquire at least two-thirds of the outstanding shares of
Zing pursuant to the offer, we will merge with and into Zing. Once the
merger takes place, Zing will no longer be publicly owned. Subject to any
appraisal rights properly exercised under New York law, upon
4
consummation of the merger, (i) each outstanding share will convert into
and represent the right to receive $15.36 per share in cash (or any higher
price per share that is paid in the tender offer) and (ii) Zing will
become a wholly-owned subsidiary of International Rectifier Corporation.
In such case, Zing common stock will no longer be traded through the
NASDAQ National Market or on a securities exchange.
- See "Introduction", Section 13 ("Effect of the Offer on the Market for the
Shares"), and, for a more complete discussion of appraisal rights, see
Section 15 ("Certain Legal Matters and Regulatory Approvals").
IF I DECIDE NOT TO TENDER BUT THE TENDER OFFER IS SUCCESSFUL, WHAT WILL HAPPEN
TO MY SHARES?
- If the tender offer is successful and the subsequent merger occurs,
shareholders who do not tender will receive the same amount of cash per
share that they would have received if they had tendered, subject to any
rights of appraisal which they properly exercise under New York law.
Therefore, if you do not tender and do not exercise appraisal rights, and
if the merger occurs, the only difference to you between tendering in the
offer and not tendering is that you will receive payment LATER without any
interest.
- See Section 13 ("Effect of the Offer on the Market for the Shares") and
Section 15 ("Certain Legal Matters and Regulatory Approvals").
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
- Shareholders can call ▇▇▇▇▇▇ & Co. at (▇▇▇) ▇▇▇-▇▇▇▇. ▇▇▇▇▇▇ & Co. is
acting as the information agent for the tender offer.
5
TO: THE HOLDERS OF COMMON STOCK OF
ZING TECHNOLOGIES, INC.:
INTRODUCTION
IRC Acquisition Corporation, a New York corporation (the "Purchaser") and a
direct, wholly-owned subsidiary of International Rectifier Corporation, a
Delaware corporation ("Parent"), hereby offers to purchase all of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Zing Technologies, Inc., a New York corporation (the "Company"), at a purchase
price of $15.36 per Share (such price, or such higher price per Share as may be
paid in the Offer, being referred to herein as the "Offer Price"), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any supplements or amendments, collectively
constitute the "Offer"). Tendering shareholders who are record owners of their
Shares and tender directly to the Depositary (as defined below) will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, stock transfer taxes on the transfer
and sale of Shares pursuant to the Offer. Shareholders who hold their Shares
through a broker or bank should consult such institution as to whether it
charges any service fee. The Purchaser will pay all fees and expenses of
ChaseMellon Shareholder Services, L.L.C., as Depositary (the "Depositary") and
▇▇▇▇▇▇ & Co., Inc., as Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
The Offer is conditioned upon, among other things, (1) there having been
validly tendered and not properly withdrawn prior to the expiration of the Offer
a number of Shares which would represent at least two-thirds of the total number
of outstanding Shares (assuming all outstanding options to purchase Shares are
cashed out for the difference between the Offer Price and the option exercise
price) (the "Minimum Condition") and (2) any waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, (the "HSR
Act") having expired or been terminated. The Company has informed the Purchaser
that as of January 26, 2000, there were 2,406,837 Shares issued and outstanding,
34,707 Shares of Common Stock reserved for issuance under the Company's
outstanding stock option agreements, and no other stock of the Company
outstanding or committed to be issued. Based on this information, and assuming
all holders of outstanding options to purchase Shares of Common Stock will have
entered into agreements to accept cash in lieu of the right to exercise such
options effective on the date the Purchaser purchases the Shares pursuant to the
Offer, the Purchaser believes that the Minimum Condition will be satisfied if
the Purchaser acquires at least 1,604,558 Shares in the Offer. Parent does not
directly or indirectly hold any Shares. Certain other conditions to the Offer
are described in Section 14.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE
"BOARD") HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER, AND THE PURCHASE OF
SHARES BY THE PURCHASER CONTEMPLATED BY THE OFFER AND THE STOCK OPTION AGREEMENT
AND HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER (INCLUDING THE
OFFER PRICE OF $15.36 PER SHARE IN CASH) ARE IN THE BEST INTEREST OF THE
COMPANY'S SHAREHOLDERS, AND RECOMMENDS THAT ALL SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Offer is being made pursuant to the Agreement and Plan of
Reorganization, dated as of January 27, 2000 (the "Merger Agreement"), by and
among the Company, Parent and the Purchaser. The Merger Agreement provides,
among other things, that as soon as practicable after the consummation of the
Offer and satisfaction or, to the extent permitted under the Merger Agreement,
waiver of all conditions to the Merger and in accordance with the applicable
provisions of the New York Business Corporation Law ("NYBCL"), the Purchaser
will be merged with and into the
6
Company (the "Merger"). Upon consummation of the Merger, the Company will be the
surviving corporation of the Merger and a direct wholly-owned subsidiary of
Parent. Thereupon, each outstanding Share (other than treasury Shares and Shares
held by shareholders, if any, who properly exercise appraisal rights) will be
converted into and represent the right to receive $15.36 in cash, or any higher
price that may be paid per Share in the Offer, without interest. See Section 11.
The Merger shall become effective upon the filing of a Certificate of Merger
with the Secretary of State of the State of New York or at such time thereafter
as is provided in the Certificate of Merger (the "Effective Time").
The purpose of the Offer, the Merger and the Merger Agreement is to enable
Parent to acquire control of the entire equity interest of the Company. The
Merger Agreement provides that, promptly following the purchase of and payment
for a number of Shares that satisfies the Minimum Condition pursuant to the
Offer, and from time to time thereafter, Parent shall be entitled to designate
on the Board of Directors, on each committee of the Board of Directors (other
than any committee established to take action under the Merger Agreement or
related agreements), and on the board of directors and each committee of Omnirel
LLC, the Company's only subsidiary, up to such number of directors as will give
the Purchaser representation on such board or committee equal to the product of
(i) the total number of directors on the Board and (ii) the percentage that the
number of Shares owned by the Purchaser and its affiliates bears to the total
number of outstanding Shares; provided, however, that until the Effective Time,
there shall be at least two directors on Company's Board of Directors who are
directors on the date of the Merger Agreement and who are not officers of the
Company (the "Continuing Directors"). In the Merger Agreement, the Company,
subject to certain limitations (see Section 11), has agreed to take all action
necessary to cause the Purchaser's designees to be elected or appointed as
directors of the Company, including increasing the size of the Board or securing
the resignation of incumbent directors or both. The Merger Agreement also
provides that certain Company actions prior to the Effective Time must be
approved by the Continuing Directors (see Section 11).
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by NYBCL, the approval and adoption
of the Merger Agreement by the requisite vote of the shareholders of the
Company. See Section 11, Section 14 and Section 15. Under the Company's
Certificate of Incorporation and NYBCL, the holders of Shares have one vote for
each Share owned of record. Under the Company's Certificate of Incorporation and
NYBCL, a two-thirds vote of the then outstanding Shares is required to approve
and adopt the Merger Agreement and the Merger. Consequently, if the Minimum
Condition is satisfied, the Purchaser will have sufficient voting power to
approve and adopt the Merger Agreement and the Merger without the vote of any
other shareholders.
Under NYBCL, if the Purchaser acquires, pursuant to the Offer or otherwise,
at least 90% of the then outstanding Shares, the Purchaser will be able to
consummate the Merger, without a vote of the Company's shareholders. In such
event, Parent and the Purchaser will take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of the Company's shareholders. If, however, the
Purchaser does not acquire at least 90% of the then outstanding Shares pursuant
to the Offer or otherwise, and a vote of the Company's shareholders is required
under NYBCL, a longer period of time will be required to effect the Merger. See
Section 11 and Section 15.
Concurrently with the execution of the Merger Agreement, and as a condition
and inducement to Parent's and the Purchaser's entering into the Merger
Agreement, the Company entered into a Stock Option Agreement dated as of the
date of the Merger Agreement (the "Stock Option Agreement") with the Purchaser.
Pursuant to the Stock Option Agreement, the Company granted to the Purchaser an
irrevocable option (the "Top-Up Stock Option") to purchase that number of Shares
(the "Top-Up Option Shares") equal to the number of Shares that, when added to
the number of Shares owned by
7
the Purchaser and Parent immediately following consummation of the Offer, will
constitute 90% of the Shares then outstanding (assuming the issuance of the
Top-Up Option Shares) at a purchase price per Top-Up Option Share equal to the
Offer Price, subject to the terms and conditions set forth in the Stock Option
Agreement, including, without limitation, that the Top-Up Stock Option would not
be exercisable if the number of Shares subject thereto exceeds the number of
authorized Shares available for issuance. If the Top-Up Stock Option is
exercised by the Purchaser (resulting in the Purchaser and Parent owning 90% or
more of the Shares then outstanding), the Purchaser will be able to effect a
short-form merger under NYBCL, subject to the terms and conditions of the Merger
Agreement. For a description of the Stock Option Agreement, see Section 11.
Concurrently with the execution of the Merger Agreement, and as a condition
and inducement to Parent's and the Purchaser's entering into the Merger
Agreement, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1998 Grantor Retained Annuity Trust, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and
▇▇▇▇ ▇▇▇▇▇▇▇ each entered into a Shareholder Support Agreement (each, a
"Shareholder Support Agreement") with the Purchaser dated as of the date of the
Merger Agreement pursuant to which, among other things, each agreed to tender
his or her Shares in the Offer. These shareholders own approximately 57% of the
outstanding shares of the Company. For a description of the Shareholder Support
Agreements, see Section 11.
On January 19, 2000, the Board of Directors of the Company unanimously
adopted resolutions determining that the Offer, the Merger, the Merger
Agreement, and the purchase of Shares by the Purchaser contemplated by the Offer
and the Stock Option Agreement are fair to and in the best interests of the
Company's shareholders and recommending that the Company's shareholders accept
the Offer and tender their Shares pursuant to the Offer. Accordingly,
Section 912 of NYBCL (which restricts the ability of an "interested shareholder"
from engaging in a "business combination" with a New York corporation for a
period of five years following the date on which such shareholder became an
interested shareholder) is inapplicable to the Offer and the Merger. See
Section 15.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE OFFER
SECTION 1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject
to the conditions of the Offer (including, if the Offer is extended or amended,
the terms and conditions of such extension or amendment), the Purchaser will,
and Parent will cause it to, accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date, and not properly withdrawn as
permitted by Section 4 below, that the Purchaser is obligated to purchase. For
purposes of the Offer, the term "Expiration Date" means 12:00 midnight, New York
City time, on Monday, March 6, 2000 (the "Initial Expiration Date"), unless and
until the Purchaser, in its sole discretion (subject to the terms of the Merger
Agreement), shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the expiration or termination of all waiting periods
imposed by the HSR Act. The Offer is also subject to certain other conditions
set forth in Section 14 below. If any of these conditions are not satisfied or
if any events specified in Section 14 have occurred or are determined by the
Purchaser to have occurred, prior to the Expiration Date, the Purchaser reserves
the right (but is not obligated), subject to the terms of the Merger Agreement
and whether or not any Shares have theretofore been accepted for payment, to
waive any of the conditions of the Offer and to make any change in the terms or
conditions of the Offer in its sole discretion; provided, however, that no
change or waiver may be
8
made, without the prior written consent of the Company, that decreases the price
per Share payable in the Offer, decreases the number of Shares sought in the
Offer, changes the form of consideration payable in the Offer, or imposes or
alters the conditions to the Offer in addition to or from those set forth in
Section 14 or in a manner that is otherwise materially adverse to the holders of
the Shares.
The Merger Agreement provides that, notwithstanding the foregoing, without
the consent of the Company, the Purchaser will have the right to extend the
Offer beyond the Initial Expiration Date only in the following events: (i) from
time to time if, at the Initial Expiration Date (or extended expiration date of
the Offer, if applicable) any of the conditions to the Offer shall not have been
satisfied or waived, until such conditions are satisfied or waived, (ii) for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "Commission") or the staff thereof
applicable to the Offer or any period required by applicable law, or (iii) if
all conditions to the Offer are satisfied or waived and the Shares validly
tendered and not withdrawn pursuant to the Offer represent more than two-thirds
of the total issued and outstanding Shares on a fully diluted basis, the
Purchaser may extend the Offer for a period not to exceed ten business days;
provided that as of the date the Offer is extended, all conditions previously
imposed (other than certain of the Company's obligations regarding its
operations and its cooperation with the Purchaser) shall be deemed satisfied as
of such extended expiration date, whether any such condition is in fact
satisfied on such dates.
In addition to the Purchaser's rights to extend and amend the Offer subject
to the provisions of the Merger Agreement, the Purchaser (i) will not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, pay for, and may delay the acceptance for payment
of, or payment for, any tendered shares, and (ii) may terminate the Offer or
amend the Offer as to any Shares not then paid for, if any of the conditions
specified in Section 14 exists. The Purchaser acknowledges that
(a) Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Purchaser to pay the consideration offered or
return the Shares tendered promptly after the termination or withdrawal of the
Offer, and (b) the Purchaser may not delay acceptance for payment of, or payment
for (except as provided in clause (i) of the first sentence of this paragraph),
any Shares upon the occurrence of any of the conditions specified in Section 14
without extending the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by a public announcement thereof, with any
announcement of an extension to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Except as provided by applicable law (including Rules 14d-4(c), 14d-6(d) and
14e-1 under the Exchange Act, which require that material changes be promptly
disseminated to shareholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which the Purchaser may choose
to make any public announcement, the Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release to the Dow ▇▇▇▇▇ News Service.
If the Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, the Purchaser will extend the Offer to
the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange
Act. Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, the Purchaser should decide to decrease the number of Shares being sought
(provided that a decrease would require the Company's consent) or to increase or
decrease the Offer Price (provided that a decrease would require the Company's
consent), such decrease in the number of Shares being sought or such increase or
decrease in the Offer Price will be applicable to all shareholders whose Shares
are accepted for payment pursuant to the Offer. If at the time notice of any
such decrease in the number of Shares being sought or increase or decrease in
the Offer Price is first published, sent or given to holders of such Shares, the
Offer is scheduled to expire prior to the tenth business day from and including
the date that such notice is first so published, sent or given, then the
9
Offer will be extended at least until the expiration of such tenth business day
period. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a federal holiday and consists of the time period from
12:01 a.m. through 12:00 Midnight, New York City time.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. During any extension of the Offer, all Shares previously tendered and
not withdrawn will remain tendered pursuant to the Offer, subject to the rights
of a tendering shareholder to withdraw his Shares. See Section 4.
Pursuant to Rule 14d-11 under the Exchange Act, Purchaser may, subject to
certain conditions, provide a subsequent offering period of from three business
days to twenty business days in length following the expiration of the Offer on
the Expiration Date ("Subsequent Offering Period"). A Subsequent Offering Period
would be an additional period of time, following the expiration of the Offer and
the purchase of Shares in the Offer, during which shareholders may tender Shares
not tendered into the Offer. A Subsequent Offering Period, if one is included,
is not an extension of the Offer which already will have been completed.
During a Subsequent Offering Period, tendering shareholders will not have
withdrawal rights and Purchaser will promptly purchase and pay for any Shares
tendered at the same price paid in the Offer. Rule 14d-11 provides that
Purchaser may provide a Subsequent Offering Period so long as, among other
things, (i) the initial twenty business days period of the Offer has expired;
(ii) the Purchaser offers the same form and amount of consideration for Shares
in the Subsequent Offering Period as in the Offer; (iii) the Purchaser accepts
and promptly pays for all securities tendered during the Offer prior to its
expiration; (iv) the Purchaser announces the results of the Offer, including the
approximate number and percentage of Shares deposited in the Offer, no later
than 9:00 a.m. Eastern time on the next business day after the Expiration Date
and immediately begins the Subsequent Offering Period; and (v) the Purchaser
immediately accepts and promptly pays for Shares as they are tendered during the
Subsequent Offering Period. In a public release, the Commission has expressed
the view that the inclusion of a Subsequent Offering Period would constitute a
material change to the terms of the Offer requiring the Purchaser to disseminate
new information to shareholders in a manner reasonably calculated to inform them
of such change sufficiently in advance of the Expiration Date (generally five
business days). In the event the Purchaser elects to include a Subsequent
Offering Period, it will notify shareholders of the Company consistent with the
requirements of the Commission.
THE PURCHASER DOES NOT CURRENTLY INTEND TO INCLUDE A SUBSEQUENT OFFERING
PERIOD IN THE OFFER, ALTHOUGH IT RESERVES THE RIGHT TO DO SO IN ITS SOLE
DISCRETION. PURSUANT TO RULE 14D-7 UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS
APPLY TO SHARES TENDERED DURING A SUBSEQUENT OFFERING PERIOD WITH RESPECT TO
SHARES TENDERED IN THE OFFER AND ACCEPTED FOR PAYMENT. THE SAME CONSIDERATION,
THE OFFER PRICE, WILL BE PAID TO SHAREHOLDERS TENDERING SHARES IN THE OFFER OR
IN A SUBSEQUENT OFFERING PERIOD, IF ONE IS INCLUDED.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares whose names
appear on the Company's shareholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
10
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms
and subject to the conditions of the Offer (including, if the Offer is extended
or amended, the terms and conditions of any such extension or amendment), the
Purchaser will accept for payment and will pay for all Shares validly tendered
and not properly withdrawn on or prior to the Expiration Date promptly after the
Expiration Date provided that the conditions of the Offer set forth in Section
14, including, without limitation, the expiration or termination of the waiting
period applicable to the acquisition of Shares pursuant to the Offer under the
HSR Act, have been satisfied or waived prior to the Expiration Date. In
addition, subject to applicable rules of the Commission, the Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any other regulatory approvals specified in Section 15.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if, as and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance of such Shares for payment pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from the Purchaser
and transmitting those payments to shareholders whose Shares have been accepted
for payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Shares (the "Share Certificates"), or
timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of
such Shares, if such procedure is available, into the Depositary's account at
The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to
the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed with any required
signature guarantees, or an Agent's Message (as defined in Section 3) in
connection with a book-entry transfer, and (iii) any other documents required by
the Letter of Transmittal. For a description of the procedure for tendering
Shares pursuant to the Offer, see Section 3. Accordingly, payment may be made to
tendering shareholders at different times if delivery of the Shares and other
required documents occur at different times.
If for any reason whatsoever acceptance for payment of or payment for any
Shares tendered pursuant to the Offer is delayed or the Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then,
without prejudice to the Purchaser's rights set forth herein, the Depositary may
nevertheless, on behalf of the Purchaser, retain tendered Shares, and those
Shares may not be withdrawn except to the extent that the tendering shareholder
is entitled to exercise and duly exercises withdrawal rights as described in
Section 4, subject, however, to the Purchaser's obligation under Rule 14e-1(c)
under the Exchange Act to pay for Shares tendered or return those Shares
promptly after termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
offered to shareholders pursuant to the Offer, such increased consideration will
be paid to all shareholders whose Shares are purchased pursuant to the Offer,
even if those Shares were tendered prior to the increase in consideration.
The Purchaser reserves the right to transfer or assign, in whole at any time
or in part from time to time, to one or more of the Purchaser's affiliates, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer or prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned (or,
in the case of Shares tendered by book-entry transfer into the Depositary's
11
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), without expense to the tendering shareholder, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
SECTION 3. PROCEDURE FOR TENDERING SHARES.
VALID TENDER. Except as set forth below, in order for Shares to be validly
tendered pursuant to the Offer, (i) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed with any required signature
guarantees, or an Agent's Message in connection with a book-entry delivery of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase on or prior to the Expiration Date, and either
(a) Share Certificates evidencing tendered Shares must be received by the
Depositary at such address, or (b) the Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case on or prior to the Expiration
Date, or (ii) the tendering shareholder must comply with the guaranteed delivery
procedures described below. The term "Agent's Message" means a message from the
Book-Entry Transfer Facility transmitted to, and received by, the Depositary
forming a part of a Book-Entry Confirmation, which states that (x) the
Book-Entry Transfer Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the Shares that are
the subject of the Book-Entry Confirmation, (y) the participant has received and
agrees to be bound by the terms of the Letter of Transmittal and (z) the
Purchaser may enforce such agreement against the participant.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) must
accompany each delivery.
BOOK-ENTRY TRANSFER. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's transfer procedures. However, although delivery of Shares may be
effected through book-entry transfer at the Book-Entry Transfer Facility, a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other documents required by the
Letter of Transmittal, must in any case be received by the Depositary at one of
its addresses set forth on the back cover of this Offer to Purchase on or prior
to the Expiration Date, or the tendering shareholder must comply with the
guaranteed delivery procedures described below. Delivery of documents to the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
SIGNATURE GUARANTEES. No signature guarantee is required for shares
tendered (i) by a registered holder of Shares who has not completed either the
box labeled "Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. All other tenders of shares must have the signatures on
the Letters of Transmittal guaranteed by a firm which is a bank, broker, dealer,
credit union, savings association or other entity which is a member in good
standing of a recognized Medallion Signature Guarantee Program or by any other
"eligible guarantor institution," as defined in Rule 17Ad-15 under the Exchange
Act (each of the foregoing, an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal. If a Share Certificate is registered in the name of a
person other than the person who signs the Letter of Transmittal, or if payment
is to be made, or a Share Certificate not accepted for payment or not tendered
is to be returned, to a person other than the registered holder(s), the Share
12
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appears on
the Share Certificate, with the signature(s) on such Share Certificate or stock
powers guaranteed as provided above. See Instructions 1 and 5 of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available, time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or a shareholder cannot complete the
procedure for delivery by book-entry transfer on a timely basis, then such
shareholder's Shares may nevertheless be tendered, provided that all of the
following conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser herewith, is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(iii) the Share Certificates evidencing all tendered Shares, in proper
form for transfer, or a Book-Entry Confirmation, together with the Letter of
Transmittal (or a facsimile thereof) properly completed and duly executed
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message) and any other documents required by the Letter
of Transmittal, are received by the Depositary within three NASDAQ National
Market trading days after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution and a representation that the shareholder
owns the Shares tendered within the meaning of, and that the tender of the
Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each
in the form set forth in the Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share Certificates evidencing such Shares or a
Book-Entry Confirmation of the delivery of such Shares (if available), (ii) a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) or, in the case of a book-entry transfer, an Agent's Message, and
(iii) any other documents required by the Letter of Transmittal. Accordingly,
payment may not be made to all tendering shareholders at the same time and will
depend upon when Share Certificates are received by the Depositary or Book-Entry
Confirmations of tendered Shares are received in the Depositary's account at the
Book-Entry Transfer Facility.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION
AND RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares pursuant to any of the procedures described above will be determined
by the Purchaser, in its sole discretion, which determination shall be final and
binding on all parties. The Purchaser reserves the absolute right to reject any
and all tenders determined by it not to be in proper form or the acceptance for
payment of which may, in the opinion of its counsel, be unlawful. The Purchaser
also reserves the absolute right to waive any defect or irregularity in any
tender of Shares of any particular shareholder, whether or not similar defects
or irregularities are waived in the case of other shareholders. No tender of
Shares will be deemed to have
13
been validly made until all defects and irregularities have been cured or
waived. None of the Purchaser, Parent, any of their affiliates or assigns, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
APPOINTMENT AS PROXY. By executing a Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints the Purchaser, its officers
and its designees, and each of them, as the shareholder's attorneys-in-fact and
proxies, with full power of substitution, in the manner set forth in the Letter
of Transmittal, to the full extent of such shareholder's rights with respect to
the Shares tendered by such shareholder and accepted for payment by the
Purchaser (and with respect to any and all other Shares or other securities
issued or issuable in respect of the Shares on or after the date of this Offer
to Purchase). All such powers of attorney and proxies shall be considered
irrevocable and coupled with an interest in the tendered Shares. Such
appointment will be effective if, when and only to the extent that, the
Purchaser accepts such Shares for payment. Upon such acceptance for payment, all
prior powers of attorney and proxies given by the shareholder with respect to
the Shares (and such other Shares and securities) will, without further action,
be revoked, and no subsequent powers of attorney, proxies or written consents
may be given or executed (and if given or executed will not be deemed effective
with respect thereto by the shareholder). The Purchaser, its officers and its
designees will, with respect to the Shares (and such other Shares and
securities) for which such appointment is effective, be empowered to exercise
all voting and other rights of the shareholder as they in their sole discretion
may deem proper at any annual or special meeting of the Company's shareholders
or any adjournment or postponement thereof, by written consent in lieu of any
such meeting or otherwise. The Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon the Purchaser's
payment for such Shares, the Purchaser must be able to exercise full voting
rights with respect to such Shares and other securities, including voting at any
meeting of shareholders or acting by written consent without a meeting.
BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer. In order to avoid backup withholding, each shareholder surrendering
Shares in the Offer to the extent not previously provided must provide the payor
of such cash with the shareholder's correct Taxpayer Identification Number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that the shareholder is not subject to backup
withholding. Certain shareholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
If a shareholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on the shareholder and payment of cash to the shareholder pursuant to
the Offer may be subject to backup withholding. All shareholders surrendering
Shares pursuant to the Offer should complete and sign the Substitute Form W-9
included in the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to the Depositary).
Non-corporate foreign shareholders should complete and sign a Form W-8,
Certificate of Foreign Status (a copy of which may be obtained from the
Depositary), in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
OTHER REQUIREMENTS. The tender of Shares pursuant to any one of the
procedures described above will constitute the tendering shareholder's
acceptance of the Offer, as well as the tendering shareholder's representation
and warranty that (i) such shareholder is the owner of the Shares within the
meaning of Rule 14e-4 promulgated under the Exchange Act, (ii) the tender of
such Shares complies with Rule 14e-4 and (iii) such shareholder has the full
power and authority to tender and assign the Shares tendered, as specified in
the Letter of Transmittal. The Purchaser's acceptance for payment of Shares
tendered pursuant to the Offer will constitute a binding agreement between the
tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
14
SECTION 4. WITHDRAWAL RIGHTS. Shares tendered pursuant to the Offer may be
withdrawn at any time on or prior to the Expiration Date. Thereafter, such
tenders are irrevocable, except that they may be withdrawn at any time after
April 7, 2000.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary (in accordance with the
Offer) at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares. Withdrawals of Shares may not be
rescinded. Any Shares properly withdrawn will thereafter be deemed not to have
been validly tendered for purposes of the Offer. However, withdrawn Shares may
be re-tendered at any time on or prior to the Expiration Date by following one
of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Parent, any of their affiliates or assigns, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
SECTION 5. CERTAIN TAX CONSIDERATIONS. Sales of Shares by shareholders of
the Company pursuant to the Offer will be taxable transactions for federal
income tax purposes and may also be taxable transactions under applicable state
and local and other tax laws. In general, a shareholder will recognize gain or
loss equal to the difference between the tax basis of his or her Shares and the
amount of cash received in exchange therefor. Such gain or loss will be capital
gain or loss if the Shares are capital assets in the hands of the shareholder
and will be long-term gain or loss if the holding period for the Shares is more
than one year as of the date of the sale of such Shares. The foregoing
discussion may not apply to shareholders who acquire their Shares pursuant to
the exercise of stock options or other compensation arrangements with the
Company or who are not citizens or residents of the United States or who are
otherwise subject to special tax treatment under the Internal Revenue Code of
1986, as amended (the "Code").
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. DUE TO THE INDIVIDUAL NATURE OF
TAX CONSEQUENCES, SHAREHOLDERS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISORS
AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM,
INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY
STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
SECTION 6. PRICE RANGE OF SHARES; DIVIDENDS. On January 11, 2000, there
were 664 holders of record of the Company's Shares. The Company's Shares are
traded on the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") National Market ("NNM") under the symbol ZING. The
following table sets forth, for the periods indicated, the high and low closing
sale prices per Share as reported in the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1999 (the "Company 10-KSB") with respect to
the fiscal years ended
15
June 30, 1999 and June 30, 1998, and thereafter in published financial sources
and do not include commissions. To date, the Company has paid no dividends on
the Shares.
LOW HIGH
-------- --------
CURRENT FISCAL YEAR ENDING JUNE 30, 2000
First Quarter............................................. $ 7.125 $ 9.187
Second Quarter............................................ 6.438 12.875
Third Quarter (through February 4, 2000).................. 12.000 15.906
FISCAL YEAR ENDED JUNE 30, 1999
First Quarter............................................. 7.437 8.875
Second Quarter............................................ 4.500 8.500
Third Quarter............................................. 6.000 8.875
Fourth Quarter............................................ 5.750 8.500
FISCAL YEAR ENDED JUNE 30, 1998
First Quarter............................................. 9.250 11.000
Second Quarter............................................ 7.750 10.500
Third Quarter............................................. 7.500 9.250
Fourth Quarter............................................ 7.500 9.000
On January 27, 2000, the last full day of trading prior to the public
announcement of the transactions contemplated by the Merger Agreement, the
reported closing sales price per Share on the NNM was $15.00. On February 4,
2000, the last full day of trading prior to commencement of the Offer, the
reported closing sales price per Share on the NNM was $15.125.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
SECTION 7. CERTAIN INFORMATION CONCERNING THE COMPANY.
GENERAL. The Company is a New York corporation with its headquarters
located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. According to the Company's
10-KSB, the Company, through a wholly-owned operating subsidiary, Omnirel LLC,
engages in the manufacture and sale of "high reliability" multi-chip power
semiconductors, integrated power modules and packaged semiconductor components
in military, industrial and high-end commercial markets.
FINANCIAL INFORMATION. The following selected consolidated financial data
relating to the Company and its subsidiary has been taken or derived from the
audited financial statements contained in the Company 10-KSB and the unaudited
financial statements contained in the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1999 (the "Company 10-Q"). More
comprehensive financial information is included in the Company 10-KSB and
Company 10-Q and the other documents filed by the Company with the Commission,
and the financial data set forth below is qualified in its entirety by reference
to such reports and other documents including the financial statements (and the
notes thereto) contained therein. Such reports and other documents may be
examined and copies may be obtained from the offices of the Commission in the
manner set forth below.
16
ZING TECHNOLOGIES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS YEAR ENDED
ENDED JUNE 30,
------------------- ------------------------------
9/30/99 9/30/98 1999 1998 1997
-------- -------- -------- -------- --------
(UNAUDITED)
CONSOLIDATED STATEMENTS OF OPERATING DATA:
Net sales...................................... $ 6,002 $ 5,969 $25,362 $21,773 $21,300
Cost of sales.................................. 3,792 3,826 16,193 13,744 12,116
------- ------- ------- ------- -------
Gross profits.................................. 2,210 2,143 9,169 8,029 9,184
Selling, general and administrative expenses... 1,322 1,328 6,059 5,279 6,257
Research and development of product and process
technology................................... 446 426 1,853 1,843 1,773
Depreciation and amortization of property,
plant and equipment.......................... 148 155 578 571 603
Interest expense............................... 279 272 1,069 1,041 993
Interest and other (income) loss, net.......... (893) 53 (2,033) (2,409) (3,597)
------- ------- ------- ------- -------
Income (loss) before income taxes and item
shown below.................................. 908 (91) 1,649 1,704 3,155
Cost in connection with acquisition of minority
of subsidiary................................ 1,227
-------
Income (loss) before taxes..................... 908 (91) 1,649 1,704 1,928
Provision for taxes............................ 205 271 181 320
------- ------- ------- ------- -------
Net income (loss).............................. 703 (91) 1,378 1,523 1,608
Basic income (loss) per share.................. 0.29 (0.04) 0.57 0.60 0.64
Diluted income (loss) per share................ 0.29 (0.04) 0.56 0.60 0.64
BALANCE SHEET DATA (at end of period):
Total current assets........................... $32,974 $32,169 $32,169 $28,896 $30,645
Total assets................................... 40,819 39,890 39,890 36,171 38,007
Long-term debt, net of current portion......... 3,074 3,231 3,231 3,013 2,903
Shareholders' equity........................... 21,624 21,149 21,149 19,015 19,970
Except as otherwise set forth in this Offer to Purchase, the information
concerning the Company contained herein has been furnished by the Company or has
been taken from or is based upon reports and other documents on file with the
Commission or otherwise publicly available. Although neither the Purchaser nor
Parent has any knowledge that would indicate that any statements contained
herein based upon such reports and documents are untrue, neither the Purchaser
nor Parent takes any responsibility for the accuracy, validity or completeness
of the information contained in such reports and other documents or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information but that are unknown to the
Purchaser or Parent.
AVAILABLE INFORMATION. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options
17
granted to them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company is required
to be disclosed in such proxy statements and distributed to the Company's
shareholders and filed with the Commission. These reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, and should also be available for inspection and copying
at prescribed rates at the regional offices of the Commission located at
Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
and Seven World Trade Center, Suite ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Copies of
this material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. In addition, such material should also be
available for inspection at the offices of the NASD located at ▇▇▇▇ ▇. ▇▇.,
▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇.
SECTION 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT.
GENERAL. The Purchaser, a newly incorporated New York corporation and a
direct wholly-owned subsidiary of Parent, was organized in connection with the
Offer and has not carried on any activities to date other than in connection
with the Offer and the Merger Agreement. Until immediately prior to the time the
Purchaser purchases Shares pursuant to the Offer, it is not anticipated that the
Purchaser will have any significant assets or liabilities or will engage in
activities other than those incident to its formation and capitalization and the
transactions contemplated by the Offer or the Merger. Because the Purchaser is a
newly formed corporation and has minimal assets and capitalization, no
meaningful financial information regarding the Purchaser is available. The
principal executive office of the Purchaser is located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and the telephone number at such office is (▇▇▇) ▇▇▇-▇▇▇▇.
All outstanding shares of common stock of the Purchaser are owned by Parent.
Parent is a Delaware corporation with principal executive offices located at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and the telephone number at such office
is (▇▇▇) ▇▇▇-▇▇▇▇. The principal business of Parent is the design and
manufacture of power semiconductors that refine electricity from wall outlets or
batteries into a more usable form, a process which Parent calls "power
conversion."
FINANCIAL INFORMATION. Because the only consideration in the Offer and
Merger is cash, and in view of the relatively small amount of consideration
payable in relation to the financial capability of Parent and its affiliates,
the Purchaser believes the financial condition of Parent, the Purchaser and
their affiliates is not material to a decision by a holder of Shares whether to
sell, tender or hold Shares pursuant to the Offer. However, consolidated
financial statements (including notes thereto) of Parent are contained in
Parent's Annual Report for the year ended June 30, 1999 (the "Parent Annual
Report") and in Parent's Quarterly Report for the quarter ended December 31,
1999 (the "Parent Quarterly Report"). Such reports and other documents may be
examined and copies may be obtained from the offices of the Commission in the
manner set forth below.
AVAILABLE INFORMATION. Parent is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is obligated to
file certain periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons in
transactions with the Company is required to be disclosed in such proxy
statements and distributed to the Company's shareholders and filed with the
Commission. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, and
should also be available for inspection and copying at prescribed rates at the
regional offices of the Commission located at Citicorp Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
18
Illinois 60661, and Seven World Trade Center, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇. Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. In addition, such material
should also be available for inspection at the offices of the New York Stock
Exchange, Inc. located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
The name, present principal occupation or employment, five-year employment
history and citizenship of each of the directors and executive officers of the
Purchaser and Parent as well as the name, principal business and address of the
corporation or other organization in which such present occupation or employment
is carried on are set forth in Schedule I hereto.
Except as described in the Offer to Purchase, none of the Purchaser, Parent
or, to the best of their knowledge, any of the persons listed on Schedule I or
any associate or wholly-owned or majority-owned subsidiary of the Purchaser,
Parent or any of the persons so listed, beneficially owns or has a right to
acquire directly or indirectly any Shares. None of the Purchaser, Parent, or, to
the best of their knowledge, any of the persons or entities referred to above,
or any of the respective executive officers, directors or subsidiaries of any of
the foregoing, has effected any transactions in the Shares during the past sixty
(60) days. Except as described in this Offer to Purchase, none of the Purchaser,
Parent, or, to the best of their knowledge, any of the persons listed on
Schedule I, has any contract, arrangement, understanding or relationship with
any other person with respect to any securities of the Company, including but
not limited to contracts, arrangements, understandings or relationships
concerning the transfer or voting of such securities, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against
loss, or the giving or withholding of proxies. Except as set forth in this Offer
to Purchase, none of the Purchaser, Parent, or, to the best of their knowledge,
any of the persons listed on Schedule I, has had any business relationships or
transactions with the Company or any of its executive officers, directors or
affiliates that are required to be reported under the rules and regulations of
the Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, there have been no contacts, negotiations or transactions between any
of Parent, the Purchaser or, to the best knowledge of the Purchaser and Parent,
any of the persons listed on Schedule I, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets.
SECTION 9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required
by the Purchaser and Parent to purchase all of the outstanding shares of the
Company (including the cash out of stock options as described in Section 11) is
approximately $37.5 million. The total amount of funds required by the Purchase
and Parent to be used in the transaction, including the payment of related fees
and expenses (approximately $1.2 million), is estimated to be approximately
$38.7 million.
The Offer is not conditioned upon any financing arrangements. The Purchaser
will obtain all necessary funds through capital contributions or advances to be
made by ▇▇▇▇▇▇. Parent has sufficient funds available to it, from cash on hand
and from undrawn or available credit under its existing revolving credit
facilities and other sources, to fund fully all of its requirements and the
Purchaser's requirements in connection with the Offer and the Merger. Under a
Credit Agreement dated July 1, 1999 ("Facility") by and among Parent, as
borrower, and a syndicate of financial institutions for which Banque Nationale
de Paris acts as administrative agent, Parent may borrow up to an aggregate
amount of $225,000,000 for general corporate purposes, including transactions
contemplated by the Offer, provided that the Requisite Lenders (as such term is
defined under such Credit Agreement) must approve the Offer, the Merger, and the
acquisition of the Shares under the terms of the Merger Agreement. Such
Requisite Lenders have given their approval. ▇▇▇▇▇▇'s ability to borrow under
the Facility is also conditioned on compliance with certain covenants and
satisfaction of certain other requirements. Parent is currently in compliance
with these covenants and requirements and believes that funds will be available
prior to the time that funds are required to pay for Shares tendered in the
19
Offer. Parent anticipates that any indebtedness incurred through borrowings
under the Facility will be repaid from a variety of sources, which may include,
but may not be limited to, funds generated internally by Parent and its
affiliates (including, following the Merger, funds generated by the Company) and
sales of equity or debt securities of the Company in private or public
offerings. No decision has been made concerning the method Parent will employ to
repay such indebtedness. Such decision will be made based on ▇▇▇▇▇▇'s review
from time to time of the advisability of particular actions, as well as on
prevailing interest rates and financial and other economic conditions and such
other factors as Parent may deem appropriate. A copy of the Facility is
incorporated by reference as an Exhibit to the Schedule TO. There are no
alternative financing arrangements in the event the primary financing becomes
unavailable.
SECTION 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In January of 1999, ▇▇▇▇▇▇ retained ▇▇▇▇▇▇ & Co. ("HCO") to provide certain
financial advisory services and to assist Parent in locating potential
acquisitions to help grow the business of Parent. On March 3, 1999, the Company
retained FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Inc. ("Fleet") as its financial advisor
in considering the Company's financial and strategic alternatives, including the
possible sale of (or other extraordinary transactions involving) the Company and
its subsidiary, Omnirel LLC ("Omnirel").
The Offer and the Merger represent the culmination of a series of
negotiations between Parent and the Company that began at Parent's initiation in
the summer of 1999. In July of 1999, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an employee of Omnirel
and a former employee of Parent, spoke to Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice
President--External Affairs and Business Development and member of the board of
directors of Parent, about the possibility of Omnirel and Parent conducting
business with each other. ▇▇. ▇▇▇▇▇▇▇ spoke with ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice
President of Government and Space Products of Parent, who, through
▇▇. ▇▇▇▇▇▇▇▇▇, contacted ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, president and chief executive
officer of Omnirel, towards the end of July, 1999. ▇▇. ▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇▇▇▇▇ arranged for a meeting on August 10, 1999, while ▇▇. ▇▇▇▇▇▇ was
visiting some of Parent's distributors in New York.
On August 10, 1999, ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇▇▇ met and exchanged general
industry and company information, including a general discussion of business
conditions in the space, military, and high reliability markets. Following the
meeting, ▇▇. ▇▇▇▇▇▇▇▇▇▇ gave ▇▇. ▇▇▇▇▇▇ an escorted tour of the Omnirel
manufacturing facility in Leominster, Massachusetts. ▇▇. ▇▇▇▇▇▇▇▇▇▇ and
▇▇. ▇▇▇▇▇▇ then discussed in general terms their current and future growth
strategies and, among other things, the possibility of an acquisition by Parent
of the Company.
During the following week, ▇▇. ▇▇▇▇▇▇ discussed with ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
chief executive officer and a member of the board of directors of Parent,
▇▇. ▇▇▇▇▇▇'▇ visit with ▇▇. ▇▇▇▇▇▇▇▇▇▇ and the brief discussion they had
regarding a possible acquisition. ▇▇. ▇▇▇▇▇ instructed ▇▇. ▇▇▇▇▇▇ to obtain more
information regarding the Company.
On August 17, 1999, ▇▇. ▇▇▇▇▇▇ telephoned ▇▇. ▇▇▇▇▇▇▇▇▇▇ and affirmed
▇▇▇▇▇▇'s interest in continuing discussions regarding a possible acquisition.
Later that day, ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, chief financial officer of Omnirel, faxed a
general overview and summary of Omnirel, under letterhead of Fleet, advisor to
the Company, to ▇▇. ▇▇▇▇▇▇.
A few days later, Fleet telephoned ▇▇. ▇▇▇▇▇▇ to determine if Parent was
serious about pursuing an acquisition. At the conclusion of this conversation
Fleet faxed ▇▇. ▇▇▇▇▇▇ a proposed Confidentiality Agreement which was executed,
after minor adjustments to the terms, by Parent on August 27, 1999.
After receiving the signed Confidentiality Agreement, Fleet sent ▇▇. ▇▇▇▇▇▇
a detailed Confidential Descriptive Memorandum that ▇▇. ▇▇▇▇▇▇, in turn,
provided to HCO for review on September 3, 1999. The cover letter to this
Memorandum asked Parent to provide a "non-binding written indication of
interest" by September 10, 1999.
20
On September 7, 1999, a representative of HCO telephoned a representative of
Fleet to express ▇▇▇▇▇▇'s interest in evaluating a possible acquisition of
Omnirel and to request extension of Fleet's September 10, 1999 deadline for
response, which extension was granted. HCO also requested additional information
including Omnirel's capital investment forecast for future years.
On September 8, 1999, HCO received Omnirel's five year capital investment
forecast from Fleet. Representatives of HCO discussed by telephone various
financial statement and forecast matters with representatives of Fleet. On
September 9, 1999, HCO received Omnirel's loan balance and forecast from Fleet.
During the period from September 9, 1999 through September 23, 1999, Parent
and HCO conducted a series of internal meetings and telephone calls to determine
if Parent wanted to proceed with negotiations for a possible acquisition, and,
if so, at what price. Contemporaneously, representatives of HCO began informal
conversations on valuation ranges and possible acquisition structures with
representatives of Fleet.
On September 23, 1999, HCO conveyed a written, non-binding letter of
interest on behalf of Parent to Fleet expressing an interest in acquiring
Omnirel for $21.5 million on a "cash-free/debt-free" basis, subject to, among
other things, the completion of legal and business due diligence, satisfactory
definitive documentation and the receipt of the necessary approvals and
consents.
From September 24, 1999 through October 1, 1999, representatives of HCO and
representatives of Fleet continued telephone conversations resulting in an
invitation for representatives of Parent and HCO to visit Omnirel to hear
▇▇▇▇▇▇▇'s management deliver a presentation concerning Omnirel, its prospects,
and the reasons why Omnirel warranted a higher valuation than the one
contemplated by Parent.
On October 14 and October 15, 1999, ▇▇. ▇▇▇▇ ▇▇▇▇▇, a representative of HCO,
▇▇. ▇▇▇ ▇▇▇▇▇, Vice President of Electronic Motion Systems for Parent,
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Executive Vice President and Chief Financial Officer of
Parent, Mr. ▇▇▇ ▇▇▇▇▇, Director of Government and Space Operations for Parent,
and ▇▇. ▇▇▇▇▇▇ visited Omnirel and attended the presentation.
During the following week, representatives of Parent and representatives of
HCO met to discuss the proposed transaction.
On October 22, 1999, representatives of HCO sent a comprehensive due
diligence information request form to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, director of Fleet's
mergers and acquisitions group.
From October 22, 1999 through October 29, 1999, representatives of HCO and
representatives of Fleet continued telephone conversations concerning various
alternative transaction structures including acquisition of the Company for cash
or stock as well as the possibility of a pooling-of-interests transaction.
On October 29, 1999, representatives of HCO transmitted, via Fleet, to
▇▇. ▇▇▇▇▇▇▇▇▇▇ a proposed letter of intent indicating Parent's interest in
acquiring Omnirel for $24 million on a "cash-free/debt-free" basis, subject to,
among other things, the completion of legal and business due diligence,
satisfactory definitive documentation and the receipt of the necessary approvals
and consents.
From November 1, 1999 through November 7, 1999, representatives of HCO and
representatives of Fleet continued telephone conversations concerning
alternative valuations and structures, including the possibility of a tax-free
reorganization.
On November 12, 1999, representatives of HCO telephoned representatives of
Fleet to advise Fleet that Parent would be sending a letter through Fleet to the
Board of Directors of the Company. This letter expressed ▇▇▇▇▇▇'s interest in
acquiring the Company for $31 million of Parent's stock in a transaction
intended to qualify as a tax-free reorganization, subject to, among other
things, the
21
completion of legal and business due diligence, satisfactory definitive
documentation and the receipt of the necessary approvals and consents.
On November 15, 1999, representatives of HCO and representatives of Fleet
discussed by telephone the details of ▇▇▇▇▇▇'s November 12, 1999 letter.
During the next two weeks, representatives of HCO and representatives of
Fleet continued to discuss the proposed transaction, including structure, price
and other terms.
On December 3, 1999, Mr. ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, managing director of HCO, after
conversations with ▇▇. ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇, indicated to Fleet that HCO was
advising Parent to offer a price that equaled $28 million of Parent's stock on a
"cash-free/debt-free" basis plus the Company's net cash and marketable
securities less net debt, subject to the completion of legal and business due
diligence, satisfactory definitive documentation and the receipt of the
necessary approvals and consents. ▇▇. ▇▇▇▇▇ also conveyed Parent's interest in
retaining the services of ▇▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇'s willingness to negotiate a
stay bonus. That same weekend, the Board of Directors of the Company met with
Fleet to discuss all pending offers for Omnirel since the Company began
considering the possibility of its sale in March of 1999.
On December 6, 1999, representatives of HCO and representatives of Fleet
held telephone discussions to clarify the terms of ▇▇▇▇▇▇'s proposal, followed
by two confirming faxes regarding the clarifications of Parent's proposal.
On December 8 and 9, 1999, representatives of HCO, Parent, Fleet and the
Company continued telephone discussions and agreed to structure the transaction
as an all-cash acquisition and agreed on a purchase price for the Company of
$28.5 million, plus net cash less net debt, less certain transaction-related
expenses, subject to completion of legal and business due diligence,
satisfactory definitive documentation and the receipt of the necessary approvals
and consents.
On December 10 and 13, 1999, representatives of HCO, Parent, Fleet and the
Company (including counsel to Parent and counsel to the Company) held telephone
discussions about the Company's desire to consummate the transaction quickly,
and the parties agreed to structure the transaction as an all-cash tender offer
with a back-end merger. Counsel to Parent commenced preparation of the Merger
Agreement among Parent, the Company, and a newly-formed wholly-owned subsidiary
of Parent as well as preparation of several ancillary agreements.
On December 15, 1999, O'Melveny & ▇▇▇▇▇ LLP, counsel to Parent, transmitted
the first draft of the Merger Agreement to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇,
LLP, counsel to the Company. From December 15, 1999 through January 26, 2000,
representatives of Parent and representatives of the Company spoke on several
occasions, exchanged several drafts, and continued to negotiate the terms of the
Merger Agreement as well as the ancillary agreements, including the Stock Option
Agreement, an incentive compensation agreement with ▇▇. ▇▇▇▇▇▇▇▇▇▇, and the
Stockholder Support Agreements (each such agreement is described further in
Section 11 ("Purpose of the Offer; Plans for the Company; Merger Agreement;
Shareholder Support Agreement; Stock Option Agreement; Confidentiality
Agreement")).
On December 28, 1999, representatives of Parent's counsel commenced legal
due diligence at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer & ▇▇▇▇▇▇▇▇▇, LLP, counsel
to the Company, and, on January 3, 2000, representatives of Parent began
business due diligence at the Company's facilities in Massachusetts. From
January 3, 2000 through January 21, 2000, representatives of ▇▇▇▇▇▇'s counsel
and of Parent continued due diligence.
On January 9, 2000, the Board of Directors of Parent met to consider the
proposed transaction. At the meeting, ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ reviewed the
discussions between the parties and reviewed the proposal. After extensive
discussion, the Board of Directors of Parent unanimously recommended that Parent
proceed with the transaction subject to final approval of the definitive
documents.
22
On January 18 and 19, 2000, the Board of Directors of the Company met to
consider the proposed transaction and the proposed Merger Agreement (and the
ancillary agreements) and reviewed the course of the discussions and
negotiations with Parent. After extensive discussion, the Board unanimously
adopted resolutions determining that the Offer, the Merger, the Merger
Agreement, and the purchase of Shares by the Purchaser contemplated by the Offer
and the Stock Option Agreement were fair to and in the best interests of the
Company's shareholders and recommended that the Company's shareholders accept
the Offer and tender their Shares pursuant to the Offer.
On January 27, 2000, the Board of Directors of Parent and the Board of
Directors of the Purchaser, by unanimous written consent, approved the tender
offer, the merger transactions, and the related agreements.
On January 27, 2000, the Merger Agreement, the Shareholder Support
Agreements, the Stock Option Agreement, and the incentive compensation agreement
were executed by the parties thereto.
On January 28, 2000, Parent and the Company issued a joint press release
announcing the Offer.
SECTION 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; MERGER AGREEMENT;
SHAREHOLDER SUPPORT AGREEMENT; STOCK OPTION AGREEMENT; CONFIDENTIALITY
AGREEMENT.
PURPOSE OF THE OFFER. The purpose of the Offer, the Merger and the Merger
Agreement is to enable Parent to acquire control of the entire equity interest
of the Company. Upon consummation of the Merger, the Company will become a
direct wholly-owned subsidiary of Parent. The Offer is being made pursuant to
the Merger Agreement. The Board of Directors of the Company has unanimously
recommended that all holders of Shares tender such Shares pursuant to the Offer.
The Board of Directors has unanimously approved the Merger Agreement and the
transactions contemplated thereby, including the Offer, the Merger, and the
purchase of Shares by the Purchaser contemplated by the Offer and the Stock
Option Agreement, which approval the Purchaser believes satisfies the relevant
requirements of NYBCL.
PLANS FOR THE COMPANY. Parent intends, upon acquiring control of the
Company, to continue its review and evaluation of the Company and its subsidiary
and their respective assets, businesses, corporate structure, capitalization,
operations, properties, policies, management and personnel. Generally, Parent
intends to integrate the Company's business into Parent's business, with a view
to achieving operating efficiencies and cost savings while maintaining and
enhancing customer service. After Parent concludes its review of the Company, it
is possible that Parent might modify some of its current plans.
Except as described above or elsewhere in this Offer to Purchase, Parent has
no present plans or proposals that would relate to or result in an extraordinary
corporate transaction involving the Company or its subsidiary (such as a merger,
reorganization, liquidation, or sale or other transfer of a material amount of
assets), any material change in the Company's capitalization or dividend policy,
or any other material change in the Company's corporate structure or business.
THE MERGER AGREEMENT
MERGER AGREEMENT. The following is a summary of certain provisions of the
Merger Agreement. The summary is qualified in its entirety by reference to the
Merger Agreement, which is incorporated herein by reference and a copy of which
has been filed with the Commission as an exhibit to Parent's Tender Offer
Statement on Schedule TO (the "Schedule TO"). In particular, when the term
"material adverse effect" is used herein it has the meaning as defined in the
Merger Agreement. The Merger Agreement may be examined and copies may be
obtained at the place and in the manner set forth in Section 7 of this Offer to
Purchase.
23
THE OFFER. The Merger Agreement provides for the making of the Offer by the
Purchaser. The Offer is conditioned upon, among other things, satisfaction of
the Minimum Condition and the expiration or termination of all waiting periods
imposed by the HSR Act. The Offer is also subject to certain other conditions
set forth in Section 14 below. If any of the conditions are not satisfied or any
events specified in Section 14 have occurred or are determined by the Purchaser
to have occurred, prior to the Expiration Date, the Purchaser reserves the right
(but is not obligated), subject to the terms of the Merger Agreement and whether
or not any Shares have theretofore been accepted for payment, to waive any of
the conditions of the Offer and to make any change in the terms or conditions of
the Offer in its sole discretion; provided, however, that no change or waiver
may be made, without the prior written consent of the Company, that decreases
the price per Share payable in the Offer, decreases the number of Shares sought
in the Offer, changes the form of consideration payable in the Offer, or imposes
or alters the conditions to the Offer in addition to or from those set forth in
Section 14 or in a manner that is otherwise materially adverse to the holders of
the Shares.
The Merger Agreement provides that, notwithstanding the foregoing, without
the consent of the Company, the Purchaser will have the right to extend the
Offer beyond the Initial Expiration Date only in the following events: (i) from
time to time if, at the Initial Expiration Date (or extended expiration date of
the Offer, if applicable) any of the conditions to the Offer have not been
satisfied or waived, until such conditions are satisfied or waived, (ii) for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "Commission") or the staff thereof
applicable to the Offer or any period required by applicable law, or (iii) if
all conditions to the Offer are satisfied or waived and the Shares validly
tendered and not withdrawn pursuant to the Offer represent more than two-thirds
of the total issued and outstanding Shares on a fully diluted basis, the
Purchaser may extend the Offer for a period not to exceed ten business days;
provided that as of the date the Offer is extended, all conditions previously
imposed (other than certain of the Company's obligations regarding its
operations and its cooperation with the Purchaser) shall be deemed satisfied as
of such extended expiration date, whether any such condition is in fact
satisfied on such dates.
In addition to the Purchaser's rights to extend and amend the Offer subject
to the provisions of the Merger Agreement, the Purchaser (i) will not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, pay for, and may delay the acceptance for payment
of, or payment for, any tendered shares, and (ii) may terminate the Offer or
amend the Offer as to any Shares not then paid for, if any of the conditions
specified in Section 14 exists. The Purchaser acknowledges that
(a) Rule 14e-1(c) under the Exchange Act requires the Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer, and (b) the Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of this paragraph), any Shares upon the occurrence of any of
the conditions specified in Section 14 without extending the period of time
during which the Offer is open.
The Company has informed the Purchaser that as of January 26, 2000, there
were 2,406,837 Shares issued and outstanding, 34,707 Shares of Common Stock
reserved for issuance under the Company's outstanding stock option agreements,
and no other stock of the Company outstanding or committed to be issued. Based
on this information, and assuming all holders of outstanding options to purchase
Shares of Common Stock will have entered into agreements to accept cash in lieu
of the right to exercise such options effective on the date the Purchaser
purchases the Shares pursuant to the Offer, the Purchaser believes that the
Minimum Condition will be satisfied if the Purchaser acquires at least 1,604,558
Shares in the Offer. Parent does not directly or indirectly hold any Shares.
Certain other conditions to the Offer are described in Section 14.
COMPANY ACTION. The Merger Agreement states that the Board of Directors, at
a meeting duly called and held, (i) unanimously determined that the Merger
Agreement, the Stock Option Agreement and the transactions contemplated thereby,
including the Offer, the Merger, and the
24
purchase of Shares by the Purchaser contemplated by the Offer and the Stock
Option Agreement, are fair and in the best interests of Company's shareholders,
(ii) unanimously approved and adopted the Merger Agreement, the Stock Option
Agreement, and the transactions contemplated thereby, including the Offer, the
Merger, and the purchase of Shares by the Purchaser contemplated by the Offer
and the Stock Option Agreement, in accordance with the requirements of NYBCL,
and (iii) unanimously resolved to recommend acceptance of the Offer and approval
and adoption of the Merger Agreement and the Merger by its shareholders. The
Company has been advised that all of its directors, and each of its executive
officers who has been informed of the transactions contemplated by the Merger
Agreement and who owns Shares, intend to tender their Shares pursuant to the
Offer and, if applicable, to vote in favor of the Merger.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that,
promptly following the purchase of and payment for a number of Shares that
satisfies the Minimum Condition pursuant to the Offer, and from time to time
thereafter, Parent shall be entitled to designate on the Board of Directors, on
each committee of the Board of Directors (other than any committee established
to take action under the Merger Agreement or related agreements), and on each
the board of directors and each committee of Omnirel LLC, up to such number of
directors as will give the Purchaser representation on such board or committee
equal to the product of (i) the total number of directors on the Board and
(ii) the percentage that the number of Shares owned by the Purchaser and its
affiliates bears to the total number of outstanding Shares. Notwithstanding the
foregoing, in the event that ▇▇▇▇▇▇'s designees are to be appointed or elected
to the Company's Board of Directors, until the Effective Time, there shall be at
least two Continuing Directors (as defined in the "Introduction") on the
Company's Board of Directors, provided that in the event that the number of
Continuing Directors shall be reduced below two for any reason whatsoever, any
remaining Continuing Directors (or Continuing Director, if there shall be only
one remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Continuing Directors for purposes of the Merger Agreement.
The Company has agreed, upon request of the Purchaser, promptly either to
increase the size of the Board (to the extent permitted by the Company's
Certificate of Incorporation) and/or to use its reasonable best efforts to
secure the resignations of such number of directors as is necessary to enable
the Purchaser's designees to be elected to the Board and to cause the
Purchaser's designees to be so elected. The Merger Agreement also provides that
following the election or appointment of the Purchaser's designees to the
Company's Board of Directors, until the Effective Time, any amendment of the
Merger Agreement requiring action by the Board or any amendment to the
Certificate of Incorporation or by-laws of the Company, any termination of the
Merger Agreement by the Company, any extension of time for performance of any of
the obligations or other acts of Parent or the Purchaser or any waiver of
compliance with any of the agreements or conditions contained herein for the
benefit of the Company and any material transaction with Parent, the Purchaser
or any affiliate thereof, unless such transaction is on terms no less favorable
to the Company than the Company would obtain in a similar transaction with an
unrelated third party, will require the approval of a majority of the Continuing
Directors. The Company's obligation to appoint the Purchaser's designees to the
Board of Directors is subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder.
THE MERGER. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, the approval of the Merger Agreement by the
shareholders of the Company and the satisfaction or waiver of the other
conditions to the Merger, the Purchaser shall be merged with and into the
Company, in accordance with NYBCL, whereupon the separate existence of the
Purchaser shall cease and the Company shall be the surviving corporation (the
"Surviving Corporation"). The Merger shall become effective upon the filing of a
Certificate of Merger with the Secretary of State of the State of New York or at
such time thereafter as is provided in the Certificate of Merger (the "Effective
Time"). As a result of the Merger, all of the rights, privileges, powers and
franchises of the Company and the Purchaser shall vest in the Surviving
Corporation, and all restrictions, disabilities,
25
liabilities and obligations of the Company and the Purchaser shall become the
restrictions, disabilities, liabilities and obligations of the Surviving
Corporation.
CONVERSION OF SHARES. The Merger Agreement provides that at the Effective
Time, (i) each issued and outstanding Share (other than Shares owned directly or
indirectly by Parent or any of its subsidiaries or by the Company as treasury
stock, and other than Shares owned by shareholders who have properly exercised
rights of appraisal under NYBCL) will be converted into the right to receive
$15.36 per Share or any higher price per Share that may be paid pursuant to the
Offer, without interest (the "Merger Consideration"), and (ii) each issued and
outstanding share of common stock of the Purchaser will be converted into and
become one fully paid and non-assessable share of common stock of the Surviving
Corporation (which will constitute the only issued and outstanding capital stock
of the Surviving Corporation). The Surviving Corporation will, thereupon, become
a direct, wholly-owned subsidiary of Parent.
STOCK OPTIONS. The Merger Agreement provides that at the closing of the
Offer, each holder of outstanding options issued by the Company to purchase
Shares, whether or not vested or exercisable, will, upon surrender of such
options, be entitled to an amount of cash determined by multiplying (i) the
excess, if any, of the Merger Consideration over the applicable exercise price
of such option by (ii) the number of Shares covered by such option, and each
such surrendered option shall terminate. At the Effective Time, any remaining
outstanding options issued by the Company will terminate, and the holders
thereof shall be entitled to receive, whether or not vested or exercisable, an
amount of cash determined by multiplying (i) the excess, if any, of the Merger
Consideration over the applicable exercise price of such option by (ii) the
number of Shares covered by such option. Any such payments shall be reduced by
applicable withholding taxes and without interest paid thereon.
Prior to the closing of the Offer, the Company will take all actions
(including, if appropriate, amending the terms of any option plan or agreement)
that are within its power to give effect to the transactions contemplated by the
immediately preceding paragraph.
SURVIVING CORPORATION. The Merger Agreement provides that the certificate
of incorporation and by-laws of the Purchaser at the Effective Time will be the
certificate of incorporation and by-laws of the Surviving Corporation until
amended in accordance with applicable law, except that the name of the Surviving
Corporation will be Zing Technologies, Inc. The Merger Agreement also provides
that the directors of the Purchaser at the Effective Time will be the directors
of the Surviving Corporation, and the officers of the Purchaser at the Effective
Time will be the officers of the Surviving Corporation.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties, including, without
limitation, representations by the Company with respect to its existence, good
standing, and corporate authority; the authorization, validity and effect of
agreements; capitalization; subsidiaries; other interests; conflicts, required
filings, and consents; compliance; Commission filings; financial statements and
undisclosed liabilities; absence of certain changes; material contracts;
litigation; taxes; employee benefits plans; labor and employment matters;
brokers; year 2000 compliance; insurance; properties; environmental laws;
related party transactions; bank accounts; intellectual property; minute books;
accounting records and internal controls; past product liability and returns;
disclosure; and disclosure schedules. Certain representations and warranties in
the Merger Agreement contain exceptions for matters that would or could, as the
case may be, not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Company (and its subsidiary, taken
as a whole) or Parent (and its subsidiaries, taken as a whole).
INTERIM OPERATIONS. Pursuant to the Merger Agreement, the Company has
agreed that, during the period from the date of the Merger Agreement to the
Effective Time (unless Parent
26
otherwise agrees in writing), the Company will, and will cause its subsidiary
to, operate its business only in the ordinary course of business consistent with
past practices and use its commercially reasonable efforts to (i) preserve its
existing business organization, insurance coverage, material rights, material
licenses or permits, advantageous business relationships, material agreements
and credit facilities; and (ii) retain its key officers and employees. Pursuant
to the Merger Agreement, without limiting the generality of the foregoing, the
Company will not and will not permit its subsidiary to: (A) enter into any
material transaction or commitment, or sell, lease, or dispose of or acquire any
material properties or assets, except purchases and sales of inventory in the
ordinary course of business consistent with past practices; (B) implement any
new employee benefit plan, or employment, compensatory or severance agreement;
(C) amend any existing employee benefit plan or employment agreement except as
required by law or by the Merger Agreement; (D) enter into, amend or terminate
any material contract except as required by law or by the Merger Agreement;
(E) take any action that would jeopardize the continuance of its material
supplier or customer relationships; (F) make any material change in the nature
of their businesses and operations; (G) enter into any transaction or agreement
with any officer, director or affiliate of the Company or its subsidiary or make
any loan or advance to any employee of Company or its subsidiary; (H) incur or
agree to incur any obligation or liability (absolute or contingent) that
individually calls for payment by the Company or its subsidiary of more than
$25,000 in any specific case or $100,000 in the aggregate, excluding purchases
of inventory in the ordinary course of business; (I) make any change to its
accounting (including tax accounting) methods, principles or practices, except
as may be required by United States generally accepted accounting principles and
except, in the case of tax accounting methods, principles or practices, in the
ordinary course of business of the Company or its subsidiary consistent with
past practice or any change in its tax elections that would materially increase
its tax liabilities; (J) authorize or make capital expenditures in excess of
$25,000; (K) mortgage or otherwise encumber or subject to any lien any
properties or assets except pursuant to existing agreements; (L) grant, confer
or award any bonuses or other forms of cash incentives to any officer, director
or employee except consistent with past practice; (M) enter into any new bank
credit agreement or line of credit or amend in any material respect its existing
bank credit agreement or lines of credit; (N) grant any severance or termination
pay to, or enter into any new employment or severance agreement with any present
or future officer, employee or director, other than consistent with past
practices; (O) take any action that would make any representation or warranty of
the Company under the Merger Agreement to be inaccurate in any material (except
where such representation or warranty is already qualified as to materiality)
respect or omit to take any action necessary to prevent such representation or
warranty from being inaccurate in any material (except where such representation
or warranty is already qualified as to materiality) respect; (P) acquire any
capital stock; or (Q) authorize, commit or agree to take, any of the foregoing
actions.
Furthermore, pursuant to the Merger Agreement, the Company has agreed that,
during the period from the date of the Merger Agreement to the Effective Time
(unless Parent otherwise agrees in writing), it will not (i) declare, set aside
or pay any dividend or make any other distribution or payment with respect to
any shares of its capital stock or other ownership interests, or (ii) directly
or indirectly redeem, purchase or otherwise acquire any shares of its capital
stock, or make any commitment for any such action. Furthermore, the Company will
not and will not permit its subsidiary to (iii) amend its certificate of
incorporation or bylaws or other charter documents, (iv) issue any shares of
capital stock, effect any stock split or reclassification or otherwise change
(or agree to change) its equity securities, options, warrants, or convertible
instruments as they existed on the date of the Merger Agreement, except pursuant
to the exercise of options, warrants, conversion rights and other contractual
rights existing on the date of the Merger Agreement and disclosed pursuant to
the Merger Agreement, or (v) grant, confer or award any option, warrant,
conversion right or other right not existing on the date of the Merger Agreement
to acquire any shares of its capital stock.
NO SOLICITATION. In the Merger Agreement, the Company has agreed not to,
directly or indirectly, through any officer, director, employee, agent,
investment banker, attorney, accountant, or
27
other representative of the Company or its subsidiary, (i) solicit, initiate,
encourage, discuss or negotiate any "Business Combination Proposal" (as defined
below) or (ii) engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to a Business Combination Proposal (excluding the Merger), or otherwise
facilitate any effort or attempt to make or implement a Business Combination
Proposal. A "Business Combination Proposal" means a merger, acquisition,
consolidation or similar transaction involving, or relating to the purchase of
(1) any assets of the Company or of the Company subsidiary, other than in the
ordinary course of business, (2) shares of Company capital stock, or (3) the
capital stock of the Company subsidiary. Except as prohibited by ongoing
obligations, if any, set forth in any existing confidentiality agreement, the
Company has agreed to notify Parent immediately if any inquiries or proposals
relating to a Business Combination Proposal are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it or any of its subsidiaries.
INSPECTION OF RECORDS; ACCESS AND INFORMATION; COOPERATION AND
NOTIFICATION. Pursuant to the Merger Agreement, from the date of the Merger
Agreement until the Effective Time, the Company will (i) give Parent, its
counsel, financial advisors, auditors and other authorized representatives full
access to the offices, records and files, correspondence, audits and properties,
as well as to all information relating to commitments, contracts, titles and
financial position, or otherwise pertaining to the business and affairs of the
Company and its subsidiary, (ii) furnish to Parent, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably request, and
(iii) instruct the employees, counsel and financial advisors of the Company and
its subsidiary to cooperate with Parent in its investigation of the business of
the Company and its subsidiary. The Company has agreed to confer on a regular
and frequent basis with Parent or its representatives to discuss, subject to
applicable law, material operational matters and the general status of the
Company's and its subsidiary's ongoing operations. The Company has also agreed
to (a) notify Parent of any significant changes in its and its subsidiary's
business, properties, assets, condition (financial or other), results of
operations or prospects, (b) notify Parent of any notice or other communication
from a governmental or regulatory agency or authority, or from any third party
alleging the consent of such person is or may be required, in connection with
the transactions contemplated by the Merger Agreement, and (c) deliver to Parent
true and correct copies of any report, statement or schedule filed with the
Commission subsequent to the date of the Merger Agreement. Furthermore, both
Parent and the Company must promptly advise the other of material inaccuracies
in any of its representations, warranties or nonperformance of any covenant or
of certain other material changes or events and must promptly provide the other
party with copies of all filings made by such party or its subsidiary with any
governmental entity in connection with the Merger Agreement and the transactions
contemplated thereby.
FILINGS; THIRD PARTY CONSENTS; OTHER ACTIONS. Subject to the terms and
conditions of the Merger Agreement, the Company and Parent have agreed to (and,
if applicable, cause their subsidiaries to) (i) promptly make their respective
filings and thereafter make any other required submissions under the HSR Act
with respect to the Merger; (ii) use all reasonable efforts to cooperate with
one another in (a) determining which filings are required to be made prior to
the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from any
governmental entity in connection with the execution and delivery of the Merger
Agreement and the consummation of the transactions contemplated thereby and (b)
timely making all such filings and timely seeking and obtaining all such
consents, approvals, permits or authorizations; and (iii) use all reasonable
efforts to take, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by the Merger Agreement. Each party must
promptly notify the other parties of any failure or prospective failure to
obtain any such consents and, if requested by
28
another party, must provide such other party with copies of all material filings
and correspondence in connection with, and evidence of, all consents applied for
or obtained.
FINANCIAL INFORMATION. Pursuant to the Merger Agreement, until the
Effective Time or, if earlier, the date of the termination of the Merger
Agreement in accordance with its terms, the Company has agreed to deliver as
soon as practicable but in no event later than thirty days after the end of each
fiscal month and forty-five days after the end of each fiscal quarter prior to
the Effective Date, beginning with the periods included in the second quarter of
fiscal 2000, its unaudited consolidated financial information for such period as
prepared by the Company's management, prepared in accordance with GAAP
consistently applied and fairly reflecting its consolidated financial condition
and the consolidated results of operations.
INDEMNIFICATION AND INSURANCE. From and after the Effective Time, ▇▇▇▇▇▇
has agreed to indemnify, defend and hold harmless to the fullest extent that the
Company would have been permitted under applicable law the present and former
officers and directors of the Company (the "Indemnified Parties") in respect of
acts or omissions occurring at or before the Effective Time. For a period of
seven years from the Effective Date, Parent must cause the Surviving Corporation
or its successor to keep in effect (i) provisions in its certificate of
incorporation and by-laws providing for indemnification of the Indemnified
Parties that is substantially the same as is currently set forth in the
Company's certificate of incorporation and by-laws, giving effect for any
successor to the laws of the state of incorporation of such successor, and
(ii) the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by the Company (provided that either
Parent or the Surviving Corporation may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured than such existing insurance).
However, if such insurance cannot be so maintained or obtained at a premium not
greater than 150% of the premium for the Company's current directors' and
officers' liability insurance, then Parent may maintain or obtain as much of
such insurance as can be maintained or obtained at a cost equal to 150% of the
current annual premiums of the Company for such insurance. For two years after
the Effective Time, Parent must cause to be maintained either the Company's
present insurance policy covering the Company's Retirement Savings Plan or a new
policy with substantially similar terms, which may be an insurance policy that
covers Parent and its subsidiaries.
ANTI-TAKEOVER STATUTES. The Company has agreed pursuant to the Merger
Agreement that if any anti-takeover or similar statute is applicable to the
transactions contemplated thereby it has and will grant such approvals and take
such actions as are necessary so that the transactions contemplated by the
Merger Agreement may be consummated as promptly as practicable on its terms and
otherwise act to eliminate the effects of such takeover statute on the
transactions by the Merger Agreement.
MISCELLANEOUS COMPANY OBLIGATIONS AND AGREEMENTS. The Company has agreed
pursuant to the Merger Agreement that, prior to or at the closing of the Offer,
(i) the Company shall have paid or caused to be paid all amounts owing to banks,
brokers and other financial institutions by the Company or its subsidiary, other
than certain amounts owed to Fleet National Bank, and (ii) the Unlimited
Guaranty and Indemnity Agreement between Fleet National Bank and the Company
dated August 28, 1997 shall be terminated.
INCENTIVE COMPENSATION AGREEMENT WITH ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇. On January 27, 2000,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, the president and chief executive officer of Omnirel LLC,
entered into an incentive compensation agreement (the "▇▇▇▇▇▇▇▇▇▇ Incentive
Compensation Agreement") with the Parent. In order to induce ▇▇. ▇▇▇▇▇▇▇▇▇▇ to
become an employee of Parent, ▇▇▇▇▇▇ has agreed, pursuant to the ▇▇▇▇▇▇▇▇▇▇
Incentive Compensation Agreement, to pay or cause to be paid to ▇▇. ▇▇▇▇▇▇▇▇▇▇
incentive bonus payments on the following schedule: $250,000 within ten days
following the Commencement Date (as defined in the ▇▇▇▇▇▇▇▇▇▇ Incentive
Compensation
29
Agreement) and $250,000 within ten days following the one-year anniversary of
the Commencement Date. If the Company terminates ▇▇. ▇▇▇▇▇▇▇▇▇▇'▇ employment
without Cause (as defined in the ▇▇▇▇▇▇▇▇▇▇ Incentive Compensation Agreement) or
if ▇▇. ▇▇▇▇▇▇▇▇▇▇ terminates his employment for Good Reason (as defined in the
▇▇▇▇▇▇▇▇▇▇ Incentive Compensation Agreement) or if ▇▇. ▇▇▇▇▇▇▇▇▇▇ dies, the
Company shall pay ▇▇. ▇▇▇▇▇▇▇▇▇▇ (or his estate or legal representatives) all
remaining bonus payments within thirty days of such event. If ▇▇. ▇▇▇▇▇▇▇▇▇▇'▇
employment is terminated for any other reason (including but not limited to
voluntary termination by ▇▇. ▇▇▇▇▇▇▇▇▇▇), all outstanding payments shall be paid
according to the schedule stated above. Regardless of the above schedule, ▇▇.
▇▇▇▇▇▇▇▇▇▇ must not resign for one year from the Commencement Date (except for
death or for Good Reason) in order to receive any bonus payments. The above is a
summary of the ▇▇▇▇▇▇▇▇▇▇ Incentive Compensation Agreement, incorporated herein
by reference, a copy of which has been filed with the Commission as an exhibit
to the Schedule TO. Such summary is qualified in its entirety by reference to
the ▇▇▇▇▇▇▇▇▇▇ Incentive Compensation Agreement.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligations of the Company, Parent and the Purchaser to consummate the Merger
are subject to the satisfaction at or prior to the Effective Time of certain
conditions, including: (i) the Merger Agreement and the transactions
contemplated thereby shall have been approved in the manner required by NYBCL,
by the Company's certificate of incorporation and by the applicable regulations
of any stock exchange or other regulatory body, as the case may be, by the
holders of the shareholders of the Company; (ii) the waiting period applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated; (iii) none of the parties shall be subject to any order or
injunction of a court of competent jurisdiction, which prohibits the
consummation of the transactions contemplated by the Merger Agreement, and (iv)
all consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other regulatory body
required in connection with the execution, delivery and performance of the
Merger Agreement shall have been obtained or made, except for filings in
connection with the Merger and any other documents required to be filed after
the Effective Time and except where the failure to have obtained or made any
such consent, authorization, order, approval, filing or registration would not
have a material adverse effect on the business, results of operations or
financial condition of Parent and the Company (and their respective
subsidiaries), taken as a whole, following the Effective Time.
The obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions: (i) Parent shall have
performed in all material respects its agreements contained in the Merger
Agreement required to be performed on or before the closing date of the Merger
as specified in the Merger Agreement (the "Closing Date"), and the
representations and warranties of Parent and the Purchaser contained in the
Merger Agreement and in any document delivered in connection therewith shall be
true and correct as of the Closing Date as if made on the Closing Date, except
(a) for changes specifically permitted by the Merger Agreement and (b) that
those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, and the Company
shall have received a certificate of the Chief Executive Officer, the Chief
Operating Officer, or an Executive Vice President of Parent, dated the Closing
Date, certifying to such effect; and (ii) the Purchaser will have purchased
Shares constituting at least two-thirds of the total issued and outstanding
Shares on a fully diluted basis pursuant to the Offer unless the failure of the
Purchaser to so purchase such shares is a result of a material breach of any
representation, warranty, or condition of the Company under the Merger
Agreement.
The obligations of Parent to consummate the Merger are subject to the
satisfaction of the following further conditions: (i) the Company shall have
performed in all material respects its agreements contained in the Merger
Agreement required to be performed on or before the Closing Date, and the
representations and warranties of the Company contained in the Merger Agreement
and
30
in any document delivered in connection therewith shall be true and correct as
of the Closing Date as if made on the Closing Date, except (a) for changes
specifically permitted by the Merger Agreement and (b) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, and Parent shall have
received a certificate of the President or a Senior Vice President of the
Company, dated the Closing Date, certifying to such effect; (ii) from the date
of the Merger Agreement through the Effective Time, there shall not have
occurred any change in the financial condition, business or operations of the
Company and its subsidiary, taken as a whole that would have or would be
reasonably likely to have a material adverse effect; (iii) after the Effective
Time, no person shall have any right under any stock option agreement or any
appreciation right plan (or any right granted thereunder) or other plan, program
or arrangement to acquire any equity securities of the Company; (iv) the
Shareholder Support Agreement shall have remained in full force and effect
through the closing or termination of the Offer, whichever first occurs;
(v) the Company shall have obtained the consent or approval of each person whose
consent or approval shall be required under any material contract to which the
Company or its subsidiary is a party; and (vi) the Purchaser will have purchased
the Shares pursuant to the Offer unless the failure of the Purchaser to so
purchase such shares is a result of a material breach of any representation,
warranty, or condition of the Purchaser under the Merger Agreement.
TERMINATION. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, (notwithstanding any approval
of the Merger Agreement by the shareholders of the Company):
(i) by the mutual consent of the Company and Parent;
(ii) by action of the Board of Directors of either Parent or the Company, if
(a) the Merger shall not have been consummated by June 30, 2000; provided, in
the case of a termination pursuant to this clause (a), that the terminating
party shall not have breached in any material respect its obligations under the
Merger Agreement in any manner that shall have proximately contributed to the
failure to consummate the Merger by June 30, 2000; (b) the approval of the
Company's shareholders required by the Merger Agreement shall not have been
obtained at a meeting duly convened therefor or at any adjournment thereof;
(c) the Purchaser shall not have accepted for payment any Shares pursuant to the
Offer before the 41st business day following commencement of the Offer or the
Purchaser shall have failed to commence the Offer within 30 days following the
date of the Merger Agreement; provided that the right to terminate the Merger
Agreement pursuant to this clause (c) shall not be available to any party whose
breach of any provision of the Merger Agreement results in the failure of the
acceptance for payment by the Purchaser of any Shares pursuant to the Offer by
such time or of the Offer to be commenced by such time; or (d) there shall be
any law or regulation that makes acceptance for payment of, and payment for, the
Shares pursuant to the Offer or consummation of the Merger illegal or otherwise
prohibited or any judgment, injunction, order or decree of any court or
governmental body having competent jurisdiction enjoining Purchaser from
accepting for payment of, and paying for, the Shares pursuant to the Offer or
the Company or Parent from consummating the Merger and such judgment,
injunction, order or decree shall have become final and non-appealable; provided
that the party seeking to terminate the Merger Agreement pursuant to this clause
(d) shall have used all reasonable efforts to remove such injunction, order or
decree;
(iii) by the Company, if (a) there has been a breach by Parent of any
representation or warranty contained in the Merger Agreement which would have or
would be reasonably likely to have an material adverse effect on Parent or
impair the ability of Parent or the Purchaser to timely consummate the
transactions contemplated by the Merger Agreement; or (b) if Parent has not
commenced the Offer within the time specified in the Merger Agreement or if
there has been a material breach of any other covenant or agreement set forth in
the Merger Agreement on the part of Parent, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by the Company to Parent; and
31
(iv) by Parent, if (a) there has been a breach by the Company of any
representation or warranty contained in the Merger Agreement which would have or
would be reasonably likely to have a material adverse effect on the Company; or
(b) there has been a material breach of any of the covenants or agreements set
forth in the Merger Agreement on the part of the Company, which breach is not
curable or, if curable, is not cured within 30 days after written notice of such
breach is given by Parent to the Company.
At any time before the Effective Time, any party to the Merger Agreement may
by action of such party's board of directors, to the extent legally allowed,
extend the time for performance of any of the obligations of the other parties,
waive any inaccuracies in the representations and warranties made to such party,
or waive compliance with any of the agreements or conditions for the benefit of
such party contained in the Merger Agreement.
In the event that the Merger Agreement is terminated, all obligations of the
parties will terminate, except the obligations of the parties pursuant to
certain provisions of the Merger Agreement related to survival; expenses;
assignment; and certain other miscellaneous provisions. However, nothing in the
Merger Agreement shall prejudice the ability of a non-breaching party from
seeking damages from any other party for any willful breach of the Merger
Agreement, including without limitation, attorneys' fees and the right to pursue
any remedy at law or in equity.
EXPENSES. Except where expressly provided otherwise, the Merger Agreement
provides that all costs and expenses incurred in connection with the Merger
Agreement and the transactions contemplated thereby will be paid by the party
incurring such expenses.
AMENDMENTS. Any provision of the Merger Agreement may be amended or waived
prior to the Effective Time, if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company, Parent and the
Purchaser, or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the adoption of the Merger Agreement by the
shareholders of the Company, no amendment shall be made which by law requires
the further approval of shareholders without obtaining such further approval.
SHAREHOLDER SUPPORT AGREEMENT
Concurrently with the execution of the Merger Agreement, Parent and the
Purchaser entered into separate Shareholder Support Agreements with each of ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, The ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ 1998 Grantor Retained Annuity Trust, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇
(each, a "Supporting Shareholder") pertaining to Shares held by each of them.
These Supporting Shareholders own approximately 57% of the outstanding Shares of
the Company. The following is a summary of certain provisions of the Shareholder
Support Agreements, each of which is incorporated herein by reference and a copy
of which has been filed with the Commission as an exhibit to the Schedule TO.
Such summary is qualified in its entirety by reference to the Shareholder
Support Agreements.
AGREEMENT TO TENDER. Pursuant to the Shareholder Support Agreements, each
Supporting Shareholder irrevocably and unconditionally agrees to validly tender
(and not withdraw), pursuant to and in accordance with the terms of the Offer,
all of the Shares that such Supporting Shareholder owns as of the date of the
Shareholder Support Agreements as well as any additional Shares that such
Supporting Shareholder may own, whether acquired by purchase, exercise of
options or otherwise, at any time thereafter (the "Supporting Shares").
VOTING AGREEMENT. Until the termination of the applicable Shareholder
Support Agreement, each Supporting Shareholder irrevocably and unconditionally
agrees to vote or cause to be voted all Supporting Shares that such Supporting
Shareholder is entitled to vote at the time of any vote of the shareholders of
the Company where such matters arise (i) in favor of the approval and adoption
32
of the Merger Agreement and in favor of the transactions contemplated thereby,
(ii) against any proposal or transaction which could prevent or delay the
consummation of the transactions contemplated by the Merger Agreement, and
(iii) against any corporate action the consummation of which would frustrate the
purposes, or prevent or delay the consummation, of the transactions contemplated
by the Merger Agreement.
PROXY. Pursuant to the Shareholder Support Agreements, each Supporting
Shareholder (i) revokes any and all previous proxies granted with respect to the
Supporting Shares owned by such Supporting Shareholder, and (ii) grants a
limited irrevocable proxy, within the meaning of NYBCL, appointing the Purchaser
as such Supporting Shareholder's attorney-in-fact and proxy, with full power of
substitution, for and in such Supporting Shareholder's name, to vote, express
consent or dissent, or otherwise to utilize such voting power in such manner and
upon and limited to only those matters referred to in the section on "VOTING
AGREEMENT" above, as the Purchaser or its proxy or substitute shall, in the
Purchaser's sole discretion, deem proper with respect to the Supporting Shares
owned by such Supporting Shareholder.
ADDITIONAL AGREEMENTS. Each of the parties to the Shareholder Support
Agreements agrees to use all reasonable 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 and which may be required under
any agreements, contracts, commitments, instruments, understandings,
arrangements or restrictions of any kind to which such party is a party or by
which such party is governed or bound, to consummate and make effective the
transactions contemplated by the Shareholder Support Agreements, to obtain all
necessary waivers, consents and approvals and effect all necessary registrations
and filings, responses to requests for additional information related to such
filings, and submission of information requested by governmental authorities.
REPRESENTATIONS AND WARRANTIES. The Shareholder Support Agreements contain
customary representations and warranties of the parties thereto.
NO PROXIES FOR OR ENCUMBRANCES ON SHAREHOLDER SHARES. Except pursuant to
the terms of the Shareholder Support Agreements, each Supporting Shareholder
agrees that, without the prior written consent of the Purchaser, such Supporting
Shareholder will not directly or indirectly, (i) grant any proxies or enter into
any voting trust or other agreement or arrangement with respect to the voting of
the Supporting Shares owned by such Supporting Shareholder or (ii) sell, assign,
transfer, encumber or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to the direct or indirect
sale, assignment, transfer, encumbrance or other disposition of, any Supporting
Shares owned by such Supporting Shareholder during the term of the applicable
Shareholder Support Agreement. Each Supporting Shareholder agrees not to seek or
solicit any such sale, assignment, transfer, encumbrance or other disposition or
any such contract, option or other arrangement or assignment or understanding
and agrees to notify the Purchaser promptly and to provide all details requested
by the Purchaser if such Supporting Shareholder shall be approached or
solicited, directly or indirectly, by any person with respect to any of the
foregoing.
INDEMNIFICATION. Parent agrees to indemnify and hold harmless the
Supporting Shareholders against any Losses (as defined in the Shareholder
Support Agreements) made against each of the Supporting Shareholders by any
third party with respect to the matters covered by the Merger Agreement.
AMENDMENTS; TERMINATION. The Shareholder Support Agreements may not be
modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties thereto. Each
Shareholder Support Agreement terminates on the earliest to occur of (i) tender
and acceptance pursuant to this Offer of the Supporting Shares owned by such
33
Supporting Shareholder, (ii) the consummation of the Merger, (iii) the six month
anniversary of such Shareholder Support Agreement and (iv) the termination of
the Merger Agreement.
STOCK OPTION AGREEMENT
The following is a summary of certain provisions of the Stock Option
Agreement entered into between the Company and the Purchaser, incorporated
herein by reference and a copy of which has been filed with the Commission as an
exhibit to the Schedule TO. Such summary is qualified in its entirety by
reference to the Stock Option Agreement.
Under the Stock Option Agreement, the Company granted to the Purchaser an
irrevocable Top-Up Stock Option to purchase that number of Top-Up Option Shares
equal to the number of Shares that, when added to the number of Shares owned by
the Purchaser and Parent immediately following consummation of the Offer, will
constitute 90% of the Shares then outstanding (assuming the issuance of the
Top-Up Option Shares) at a purchase price per Top-Up Option Share equal to the
Offer Price. However, the Top-Up Stock Option will not be exercisable if the
number of Shares subject thereto exceeds the number of authorized Shares
available for issuance.
Subject to the terms and conditions of the Stock Option Agreement, the
Top-Up Stock Option may be exercised by the Purchaser, at its election, in
whole, but not in part, at any one time after the occurrence of a Top-Up
Exercise Event (as defined below) and prior to the Top-Up Termination Date (as
defined below). A "Top-Up Exercise Event" shall occur for purposes of the Stock
Option Agreement upon the Purchaser's acceptance for payment pursuant to the
Offer of Shares constituting, together with Shares owned directly or indirectly
by Parent, more than two-thirds but less than 90% of the Shares then
outstanding. The "Top-Up Termination Date" shall occur for purposes of the Stock
Option Agreement upon the earliest to occur of: (i) the Effective Time;
(ii) the date which is 20 business days after the occurrence of a Top-Up
Exercise Event; and (iii) the termination of the Merger Agreement.
The obligation of the Company to deliver Top-Up Option Shares upon the
exercise of the Top-Up Stock Option is subject to the following conditions:
(i) any applicable waiting period under the HSR Act shall have expired or been
terminated; and (ii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the exercise of the Top-Up
Stock Option or the delivery of the Top-Up Option Shares in respect of any such
exercise.
Any provision of the Stock Option Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to the Stock Option Agreement or, in the case of a
waiver, by each party against whom the waiver is to be effective.
34
CONFIDENTIALITY AGREEMENT
On August 27, 1999, Parent and Fleet National Bank, financial advisor to the
Company, entered into a Confidentiality Agreement. Each party has agreed therein
that for three years following the date of the Confidentiality Agreement, it
will keep confidential all nonpublic, confidential, or proprietary information
of the other party, subject to certain exceptions, and will use the confidential
information for no purpose other than evaluating a possible transaction between
the Company and Parent. The foregoing is a summary of certain provisions of the
Confidentiality Agreement and is qualified in its entirety by reference to the
Confidentiality Agreement. The Confidentiality Agreement is incorporated herein
by reference and a copy has been filed with the Commission as an exhibit to the
Schedule TO. The Confidentiality Agreement shall survive termination of the
Merger Agreement.
SECTION 12. DIVIDENDS AND DISTRIBUTIONS. As described above, the Merger
Agreement provides that, from the date of the Merger Agreement to the Effective
Time (unless Parent agrees otherwise in writing), the Company will not
(i) declare, set aside or pay any dividend or make any other distribution or
payment with respect to any shares of its capital stock or other ownership
interests, or (ii) directly or indirectly redeem, purchase or otherwise acquire
any shares of its capital stock, or make any commitment for any such action.
Furthermore, the Company will not and will not permit its subsidiary to
(iii) amend its certificate of incorporation or bylaws or other charter
documents, (iv) issue any shares of capital stock, effect any stock split or
reclassification or otherwise change (or agree to change so) its equity
securities, options, warrants, or convertible instruments as they existed on the
date of the Merger Agreement, except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on the date of
the Merger Agreement and disclosed pursuant to the Merger Agreement, or
(v) grant, confer or award any option, warrant, conversion right or other right
not existing on the date of the Merger Agreement to acquire any shares of its
capital stock.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the preceding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
SECTION 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ
NATIONAL MARKET LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and will reduce the number of holders of Shares, which could
adversely affect the liquidity and market value of the remaining Shares held by
shareholders other than the Purchaser. The Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for, or marketability of,
the Shares or whether such reduction would cause future market prices to be
greater or less than the Offer Price.
Depending upon the aggregate market value and per Share price of any Shares
not purchased pursuant to the Offer, following the Offer the Shares may no
longer meet the standards for continued listing on the NASDAQ National Market
which requires an issuer to have at least 100,000 publicly held Shares with an
aggregate market value of at least $5,000,000. Shares held by directors and
officers (or their immediate families) of the Company and other concentrated
holdings of 10% or more of the Shares outstanding generally will not be
considered to be publicly held for the purpose of the foregoing standards. In
the event that the Shares were no longer quoted on the NASDAQ National Market,
it is possible that the Shares could continue to trade in the over-the-counter
market and that quotations would continue to be reported through other sources.
The extent of the public market for the Shares and the availability of such
quotations would, however, depend upon the number of shareholders remaining at
such time, the interest in maintaining a market in the Shares on the part of
securities
35
firms, the possible termination of registration of the Shares under the Exchange
Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Such
registration of the Shares may be terminated upon application of the Company to
the Commission if the Shares are not listed on a national securities exchange or
quoted on the NASDAQ National Market and there are fewer than 300 holders of
record of the Shares. Deregistration of the Shares under the Exchange Act would
reduce substantially the information required to be furnished by the Company to
holders of Shares and to the Commission and would render inapplicable certain of
the provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of Section 14(a) that the Company
furnish shareholders with proxy materials in connection with shareholders'
meetings and the requirements of Rule 13e-3 promulgated under the Exchange Act
with respect to "going private" transactions. It is the current intention of
Parent to cause the Company to deregister the Shares after the consummation of
the Offer if the requirements for termination of registration are met.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be "margin securities." The Shares currently are "margin
securities" under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that following the Offer, the Shares would cease to
constitute "margin securities" for the purpose of the Federal Reserve Board's
margin regulations and, therefore, could no longer be used as collateral for
margin loans made by brokers.
SECTION 14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
provision of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to amend the Offer (subject to the terms of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including, without
limitation, Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or to return tendered Shares promptly after termination or
withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer, and
may postpone the acceptance for payment or, subject to the restrictions referred
to above, payment for, any Shares tendered pursuant to the Offer, and may
terminate or amend the Offer and not accept for payment any Shares if:
(i) the Minimum Condition shall not have been satisfied or waived pursuant
to the Merger Agreement prior to the Expiration Date,
(ii) any applicable waiting period under the HSR Act shall not have expired
or been terminated prior to the Expiration Date,
(iii) at any time on or after the date of the Merger Agreement and prior to
the Initial Expiration Date of the Offer (or extended expiration date of the
Offer only if under the Merger Agreement these conditions remain applicable),
any of the following conditions exist:
(a) there shall be instituted and remain pending any action,
investigation or proceeding by any government or governmental authority or
agency, domestic or foreign, or by any other person, before any court or
governmental authority or agency, domestic or foreign,
(1) challenging the acquisition by Parent or the Purchaser of any
Shares under the Offer, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the
other transactions contemplated by the Merger Agreement or seeking to
require the Company, Parent or the Purchaser to pay any damages related
to the Offer, the Merger or the other transactions contemplated by the
Merger Agreement that are material in relation to the Company taken as a
whole,
36
(2) seeking to impose limitations on the ability of the Purchaser, or
to render the Purchaser unable to accept for payment, pay for or purchase
some or all of the Shares pursuant to the Offer and the Merger,
(3) seeking to restrain or prohibit Parent's ownership or operation
(or that of Parent's subsidiaries) of all or any portion of the business
or assets of the Company or its subsidiary or of Parent or its
subsidiaries or to compel Parent or its subsidiaries to dispose of or
hold separate all or any portion of the business or assets of the Company
or its subsidiary or of Parent or its subsidiaries,
(4) seeking to impose limitations on the ability of Parent, the
Purchaser or any other subsidiary of Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the
right to vote any Shares acquired or owned by Parent, the Purchaser or
any other subsidiary of Parent on all matters properly presented to the
Company's shareholders, except such limitations on voting securities as
may be required as a result of Parent or the Purchaser not complying with
applicable securities laws,
(5) seeking to require divestiture by Parent, the Purchaser or any
other subsidiary of Parent of any Shares, or
(6) that otherwise is reasonably likely to have a material adverse
effect on the Company; or
(b) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by any
court, government or governmental authority or agency, domestic or foreign,
other than the routine application of the waiting period provisions of the
HSR Act to the Offer or the Merger, that is reasonably likely, directly or
indirectly, to result in any of the consequences referred to in clauses
(1) through (6) of paragraph (a) above; or
(c) the Board of Directors of the Company (1) shall have withdrawn, or
modified in a manner adverse to Parent, its approval or recommendation of
the Merger Agreement, the Offer or the Merger or (2) shall have failed to
reaffirm such approval or recommendation upon Parent's reasonable request;
or
(d) the Company shall have breached or failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company required to be performed or complied
with by it under the Merger Agreement prior to the consummation of the
Offer; or any representations and warranties of the Company contained in the
Merger Agreement shall not be true and correct, individually or in the
aggregate, so as to be reasonably likely to have a material adverse effect
on the Company, in each case, when made or (except those that speak as to a
specific date) as of the expiration date as set forth in the first sentence
to this clause (iii) of the Offer as if made at and as of such time; or
(e) there shall have occurred a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States that is reasonably expected to have a
material adverse effect on the Company; or
(f) the Merger Agreement shall have been terminated by Parent in
accordance with its terms; or
(g) Parent shall not have received an opinion from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Singer
& ▇▇▇▇▇▇▇▇▇, LLP pursuant to the Merger Agreement in substantially the form
attached to the Merger Agreement,
(iv) the ▇▇▇▇▇▇▇▇▇▇ Incentive Compensation Agreement in substantially the
form attached to the Merger Agreement shall not be in effect, or
37
(v) any employee of the Company, or the Company subsidiary, who owes any
indebtedness to the Company or any Company subsidiary has not either (1) repaid
all principal and interest due thereon in full or (2) instructed ChaseMellon
Shareholder Services, L.L.C. to pay to Parent an amount equal to such principal
and interest out of the proceeds due such employee pursuant to the Offer and to
remit the balance of such proceeds to such employee.
Except as otherwise provided in the Merger Agreement, the foregoing
conditions are for the sole benefit of Parent and the Purchaser and may, subject
to the terms of the Agreement, be waived by Parent or the Purchaser in whole or
in part at any time and from time to time in their discretion. The failure by
Parent or the Purchaser at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time
prior to the earlier of the scheduled expiration date of the Offer or when
payment for the Shares tendered pursuant to the Offer should have been made by
Parent or the Purchaser.
A public announcement will be made of a material change in, or waiver of,
such conditions to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, and the Offer will be extended in connection with any such change
or waiver to the extent required by such rules.
SECTION 15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. The Purchaser is not aware of any material pending legal
proceeding relating to the Offer. Except as otherwise set forth in this Offer to
Purchase, based upon an examination of publicly available information filed by
the Company with the Commission, neither the Purchaser nor Parent is aware of
(i) any license or other regulatory permit that appears to be material to the
business of the Company and its subsidiary, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiary) pursuant to the Offer or
the Merger, or (ii) any filings, approvals or other actions by or with any
domestic (federal or state), foreign or supranational governmental authority or
administrative or regulatory agency that would be required prior to the
acquisition of Shares (or the indirect acquisition of the stock of the Company's
subsidiary) by the Purchaser as contemplated herein. Should any such approval or
other action be required, it is the Purchaser's present intention to seek such
approval or action. However, except as otherwise set forth in this Offer to
Purchase, the Purchaser does not presently intend to delay the purchase of
Shares tendered pursuant to the Offer pending the receipt of any such approval
or the taking of any such action (subject to the Purchaser's right to delay or
decline to purchase Shares if any of the conditions in Section 14 shall have
occurred). There can be no assurance that any such approval or other action, if
needed, would be obtained without substantial conditions or that adverse
consequences might not result to the business of the Company, Parent or the
Purchaser or that certain parts of the businesses of the Company, Parent or the
Purchaser might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or other action or, in
the event that such approval was not obtained or such other action was not
taken, any of which could cause the Purchaser to elect to terminate the Offer
without the purchase of the Shares thereunder. The Purchaser's obligation under
the Offer to accept for payment and pay for Shares is subject to certain
conditions discussed in Section 14, including conditions relating to the legal
matters discussed in this Section 15.
STATE TAKEOVER STATUTES--NEW YORK. The Company is incorporated under the
laws of the State of New York and is subject to the provisions of Section 912 of
NYBCL regulating certain business combinations. Section 912 of NYBCL prevents a
domestic corporation from engaging, in certain circumstances, in a "business
combination", which includes a merger or sale of more than 10% of the
corporation's assets with any "interested shareholder" (generally defined as a
shareholder who, together with its affiliates and associates, owns 20% or more
of the corporations' outstanding voting
38
shares) for five years following such interested shareholder's stock acquisition
unless one of the following conditions is satisfied: (i) the business
combination or the purchase of stock made by such interested shareholder had
been approved by the board of directors prior to such interested shareholder's
stock acquisition date, (ii) the business combination is approved by a majority
of shareholders other than the interested shareholder no earlier than five years
after such interested shareholder's stock acquisition date, or (iii) the price
paid to all shareholders meets certain conditions relating to the type and
minimum amount of consideration to be paid to shareholders other than the
interested shareholder. A New York corporation may "opt out" of the provisions
of Section 912 with an express provision in its original certificate of
incorporation or an express provision in its certificate of incorporation or
by-laws resulting from a shareholders' amendment approved by at least a majority
of the outstanding voting shares (other than the interested shareholders), which
amendment generally will not become effective until 18 months after the date of
such amendment. In connection with the review of the proposed transaction, the
Company's Board of Directors prior to the execution of the Merger Agreement
unanimously (i) approved the Offer, the Merger, and the purchase of Shares
contemplated by the Offer and the Stock Option Agreement, (ii) determined that
the terms of the Offer and the Merger, including the Offer Price of $15.36 per
Share in cash, are in the best interest of the shareholders of the Company, and
(iii) recommended that the shareholders of the Company accept the Offer and
tender their Shares pursuant to the Offer. Accordingly, the Purchaser and Parent
believe that Section 912 of NYBCL is inapplicable to the Merger Agreement, the
Offer and the Merger because its provisions have been satisfied.
STATE TAKEOVER STATUTES--OTHER. A number of other states have also adopted
takeover laws and regulations which purport to varying degrees to be applicable
to attempts to acquire securities of corporations which are incorporated in such
states or which have or whose business operations have substantial economic
effects in such states, or which have substantial assets, security holders,
principal executive offices or principal places of business therein. The
Company, directly or through its subsidiary, conducts business in a number of
states throughout the United States, some of which have enacted such laws.
Except as described herein, the Purchaser does not know whether any of these
laws will, by their terms, apply to the Offer or any merger or other business
combination between the Purchaser or any of its affiliates and the Company and
has not complied with any such laws. To the extent that certain provisions of
these state takeover statutes purport to apply to the Offer, the Purchaser
believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in ▇▇▇▇▇ ▇. MITE Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Act, which, as a matter of state securities law,
made takeovers of corporations meeting certain requirements more difficult.
However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court
of the United States held that the State of Indiana could, as a matter of
corporate law and in particular those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquirer from
voting on the affairs of a target corporation without the prior approval of the
remaining shareholders; provided that such laws were applicable only under
certain conditions. Subsequently, a number of federal courts have ruled that
various state takeover statutes were unconstitutional insofar as they apply to
corporations incorporated outside the state of enactment.
Should any person seek to apply any state takeover law, the Purchaser will
take reasonable efforts to resist such application, which may include
challenging the validity or applicability of any such statute in appropriate
court proceedings. In the event it is asserted that one or more state takeover
laws is applicable to the Offer or the Merger, and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer, the
Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined, the
Purchaser might be unable to accept for payment or pay for any Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer and
the Merger. In such case, the Purchaser may not be obligated to accept for
payment, or pay for, any Shares tendered. See Section 14.
39
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, shareholders of the Company at the
time the Merger is consummated would have certain rights to dissent and demand
appraisal of their Shares under Section 623 of NYBCL. Dissenting shareholders
who comply with the requisite statutory procedures under NYBCL would be entitled
to a judicial determination and payment of the "fair value" of their Shares as
of the close of business on the day prior to the date of shareholder
authorization of the Merger, together with interest thereon, at such rate as the
court finds equitable, from the date the Merger is consummated until the date of
payment. Under NYBCL, in fixing the fair value of the Shares, a court would
consider the nature of the transaction giving rise to the shareholders' right to
receive payment for Shares and its effects on the Company and its shareholders,
the concepts and methods then customary in the relevant securities and financial
markets for determining fair value of Shares of a corporation engaging in a
similar transaction under comparable circumstances, and all other relevant
factors. The foregoing summary of the rights of objecting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise any available dissenters' rights. The
preservation and exercise of dissenters' rights require strict adherence to the
applicable provisions of NYBCL.
"GOING PRIVATE" TRANSACTIONS. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which the Purchaser seeks to acquire the remaining Shares not held by it. The
Purchaser believes, however, that Rule 13e-3 is not applicable to the Merger.
Rule 13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority shareholders in
such transaction, be filed with the Commission and disclosed to shareholders
prior to consummation of the transaction.
SHAREHOLDER APPROVAL. Under NYBCL, the approval of the Company's Board of
Directors and the affirmative vote of the holders of a two-thirds majority of
the outstanding Shares are required to approve and adopt the Merger Agreement
and the transactions contemplated thereby. The Company has represented in the
Merger Agreement that the execution and delivery of the Merger Agreement and the
Stock Option Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval and
adoption of the Merger by the shareholders of the Company in accordance with
NYBCL. In addition, the Company has represented that the affirmative vote of the
holders of a two-thirds majority of the outstanding Shares is the only vote of
the holders of any of the Company's capital stock necessary in connection with
the consummation of the Merger. Therefore, unless the Merger is consummated in
accordance with the short-form merger provisions under NYBCL described below (in
which case no action by the shareholders of the Company, other than the
Purchaser, will be required to consummate the Merger), the only remaining
corporate action of the Company will be the approval and adoption of the Merger
Agreement and the transactions contemplated thereby by the affirmative vote of
the holders of a two-thirds majority of the Shares. The Merger Agreement
provides that Parent will vote all Shares beneficially owned by it in favor of
the adoption of the Merger Agreement at the Company's shareholder's meeting. In
the event that the Purchaser acquires that percentage of outstanding Shares at
least equal to the Minimum Condition, it would have the ability to ensure
approval of the Merger by the shareholders of the Company.
SHORT-FORM MERGER. NYBCL would permit the Merger to occur without a vote of
the Company's shareholders (a "short-form merger") if the Purchaser were to
acquire at least 90% of the outstanding Shares. If, however, the Purchaser does
not acquire at least 90% of the then outstanding
40
Shares pursuant to the Offer or otherwise, and a vote of the Company's
shareholders is required under NYBCL, a longer period of time will be required
to effect the Merger.
APPROVAL UNDER THE COMPANY'S CERTIFICATE OF INCORPORATION. Paragraph
Seventh of the Company's Restated Certificate of Incorporation provides that if
any person owns of record or beneficially (directly or indirectly) more than 10%
of the shares of Common Stock of the Company, then certain transactions
(including the Merger) may not be effected without the affirmative vote of the
holders of at least two-thirds of the shares of Common Stock of the Company,
unless such transaction (such as the Merger) was approved in advance by the
Company's board of directors prior to the time that such person became such an
owner of more than 10% of the shares of Common Stock of the Company. On
January 19, 2000, the Board of Directors of the Company unanimously approved the
Merger Agreement and the transactions contemplated thereby, including the Offer,
the Merger, and the purchase of Shares contemplated by the Offer and the Stock
Option Agreement. As a result of such unanimous approval by the Company's board
of directors, the provisions of Paragraph Seventh of the Company's Restated
Certificate of Incorporation shall not apply to the Merger Agreement, the Stock
Option Agreement, the Offer or the Merger.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the FTC and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and certain waiting period requirements have been
satisfied. The acquisition of Shares by the Purchaser pursuant to the Offer is
subject to the HSR Act requirements. See Section 2.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15-calendar day waiting period following the required filing of a Pre-merger
Notification and Report Form under the HSR Act by Parent, which Parent intends
to submit as soon as practicable after the date hereof. The waiting period under
the HSR Act would expire at 11:59 p.m., New York City time, 15 days after the
filing date, unless early termination of the waiting period were granted or
Parent received a request from the Antitrust Division or the FTC for additional
information or documentary material prior thereto. If such a request were made,
the waiting period applicable to the Offer will expire on the tenth calendar day
after the date of substantial compliance by Parent with such request.
Thereafter, the waiting period may be extended by court order or by consent of
▇▇▇▇▇▇. Although the Company is required to file certain information and
documentary material with the Antitrust Division and the FTC in connection with
the Offer, neither the Company's failure to make such filings nor a request to
the Company from the Antitrust Division or the FTC for additional information or
documentary material will extend the waiting period.
The waiting period under the HSR Act may be terminated by the FTC and the
Antitrust Division prior to its expiration. Accordingly, pursuant to the HSR
Act, each of Parent and the Company intend to request early termination of the
waiting period applicable to the Offer. There can be no assurance, however, that
the 15-day HSR Act waiting period will be terminated early. Shares will not be
accepted for payment or paid for pursuant to the Offer until the expiration or
earlier termination of the applicable waiting period under the HSR Act. See
Section 2 and Section 14. Subject to Section 4, any extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for by
applicable law. If the Purchaser's acquisition of Shares is delayed due to a
request by the Antitrust Division or the FTC for additional information or
documentary material pursuant to the HSR Act, the Offer will be extended in
certain circumstances.
No separate HSR Act requirements with respect to the Merger or the Merger
Agreement will apply if the 15-day waiting period relating to the Offer (as
described above) has expired or been terminated. However, if the Offer is
withdrawn or if the filing relating to the Offer is withdrawn prior to the
expiration or termination of the 15-day waiting period relating to the Offer,
the Merger may not
41
be consummated until 30 calendar days after receipt by the Antitrust Division
and the FTC of the Pre-merger Notification and Report Forms of both Parent and
the Company, unless the 30-day period is earlier terminated by the Antitrust
Division and the FTC. Within such 30-day period, the Antitrust Division or the
FTC may request additional information or documentary materials from Parent
and/or the Company, in which event, the acquisition of Shares pursuant to the
Merger may not be consummated until twenty (20) days after both Parent and the
Company substantially comply with such requests. Thereafter, the waiting periods
may be extended only by court order or by consent.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase by
the Purchaser of Shares pursuant to the Offer, either the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the acquisition
of Shares pursuant to the Offer or seeking the divestiture of Shares purchased
by the Purchaser or the divestiture of substantial assets of Parent, the Company
or any of their respective subsidiaries. Private parties and state attorneys
general may also bring legal action under federal or state antitrust laws under
certain circumstances. Although the Purchaser believes that the acquisition of
Shares pursuant to the Offer would not violate the antitrust laws, there can be
no assurance that a challenge to the Offer on antitrust grounds will not be made
or, if a challenge is made, what the outcome will be.
SECTION 16. FEES AND EXPENSES. Except as set forth below, neither Parent
nor the Purchaser will pay any fees or commissions to any broker, dealer or
other person in connection with the solicitation of tenders of Shares pursuant
to the Offer.
▇▇▇▇▇▇ & Co. ("HCO") has provided certain financial advisory services to
Parent and the Purchaser in connection with the acquisition of the Company.
Parent has agreed to pay HCO a fee of $600,000 payable upon consummation of the
Offer. The Purchaser has also retained ▇▇▇▇▇▇ & Co., Inc. to act as the
Information Agent and ChaseMellon Shareholders Services, L.L.C. to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telegraph and personal interview and may
request brokers, dealers and other nominee shareholders to forward the Offer
materials to beneficial owners. The Information Agent and the Depositary will
receive reasonable and customary compensation for their services relating to the
Offer and will be reimbursed for certain out-of-pocket expenses, including the
fees and expenses of legal counsel. The Purchaser and Parent have also agreed to
indemnify the Information Agent and the Depositary against certain liabilities
and expenses in connection with the Offer, including certain liabilities under
the federal securities laws.
Brokers, dealers, commercial banks and trust companies will, upon request,
be reimbursed by the Purchaser for customary mailing and handling expenses
incurred by them in forwarding the Offer materials to their customers.
SECTION 17. MISCELLANEOUS. The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to all holders
of Shares. The Purchaser is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute or
seek to have such statute declared inapplicable to the Offer. If after such good
faith effort, the Purchaser cannot comply with such state statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
42
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission a Schedule TO
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth in
Section 7 of this Offer to Purchase.
IRC ACQUISITION CORPORATION
February 7, 2000
43
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. DIRECTORS AND EXECUTIVE OFFICERS OF INTERNATIONAL RECTIFIER
CORPORATION. The following table sets forth the name, business address, present
principal occupation or employment and five-year employment history of the
directors and executive officers of Parent. The business address of each
director and executive officer is ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
unless otherwise set forth below. Unless otherwise indicated, each occupation or
employment set forth opposite an individual's name refers to occupation or
employment with Parent.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS CITIZENSHIP
------------------------------------- -------------------------------------------------- -------------
▇▇▇▇ ▇▇▇▇▇(1) ▇▇. ▇▇▇▇▇ has been a Director of Parent since United States
1947. He is the Chairman of the Board of
Directors of Parent.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇(1) ▇▇. ▇▇▇▇▇ has been a Director of Parent since United States
1994. He has been the Chief Executive Officer of
Parent since his election on March 6, 1995. He
is also on the Board of Overseers for the RAND
Corporation and on the Board of Trustees of the
California Institute of Technology.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ has been a Director of Parent since United States
Prestige Holdings, Ltd. 1993. He is also the Chairman of the Board,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ President and Chief Executive Officer of
Bonsall, CA 92003 Prestige Holdings, Ltd., an investment advisory
firm.
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ has been a Director of Parent since United States
Konec, Inc. 1979. From August 1994 to December 1997, he was
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, #609 the Managing Member of Konec ▇.▇.▇., ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ management consulting firm. In December 1997,
Konec L.L.C. converted to Konec, Inc., and he
became the President and Chairman of the Board
of Konec, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇(1) ▇▇. ▇▇▇▇▇ has been a Director of Parent since United States
iSuppli, Inc. 1994. He is the President, Chief Executive
P. O. Box 30464 SMB Officer and also a Director of iSuppli Inc., an
5th Floor internet company. He is also a Director and
Queensgate House, ▇▇▇▇▇▇ Chief Executive Officer of Lidow
Town, Grand Cayman Technologies, Inc., a Member of the Leadership
Cayman Islands, B.W.I. Council of the School of Engineering of
Princeton University, and a Trustee of the Los
Angeles Philharmonic. He was a Chief Executive
Officer of Parent from March 6, 1995 until
June 15, 1999. Prior to that he served in
various managerial positions within Parent.
S-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS CITIZENSHIP
------------------------------------- -------------------------------------------------- -------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ has been a Director of Parent since Japan
Kanazawa Institute of 1997. Since April 1997 he has been a Professor
Technology at the Kanazawa Institute of Technology in
7-1 Ohgigaoka ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Japan. He was employed by Hitachi Ltd.
Ishikawa 921-8501 Japan from 1960 to March 1997, his last position being
Senior Counsel-Intellectual Property.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ has been a Director of Parent since United States
1990. He is also the Executive Vice President of
External Affairs and Business Development. He
has been employed by Parent since 1961 in
various managerial positions.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ has been a Director of Parent United States
Stanford University since 1994. He is also the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Engineering ▇▇▇▇▇▇ Professor of Engineering, ▇▇▇▇ of the
Mail Code 4027 School of Engineering and Director of the
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ Stanford Nanofabrication Facility at Stanford
Stanford, CA 94305 University.
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ has been a Director of Parent since United States
Management Research, Inc. 1988. He is the Managing Director of Management
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Research, a management consulting firm. He is
Huntington Beach, CA 92649 also a Director of The ▇▇▇▇▇ Company, King's
Seafood Co., First Consulting Group, Semtech
Corporation, ▇▇▇▇▇▇▇ Fund, Inc., and ▇▇▇▇▇▇ &
Co. He was formerly a Managing Director of the
Los Angeles office of McKinsey & Co., a
management consulting firm.
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇. ▇▇▇▇ has been a Director of Parent since 1984. United States
California Institute of He is the ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Distinguished Service
Technology Mail Code 103-33 Professor and Professor of Physics at California
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. Institute of Technology.
Pasadena, Ca 91107
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇ was elected Executive Vice President, United States
Components Group in November 1999. He has been
employed by Parent since August 1992 in various
managerial positions.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ is the Executive Vice President and United States
Chief Financial Officer of Parent. He joined
Parent in July 1990 as Director of Corporate
Accounting and was promoted to Corporate
Controller in December 1990. ▇▇. ▇▇▇▇▇ became
Vice President, Controller and Principal
Accounting Officer in 1991, and, in 1993, became
Vice President and Chief Financial Officer. In
November 1998, ▇▇. ▇▇▇▇▇ was elected Executive
Vice President.
S-2
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS CITIZENSHIP
------------------------------------- -------------------------------------------------- -------------
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ is the Executive Vice President, United States
Secretary and General Counsel of Parent. He
joined Parent as Vice President and General
Counsel in January 1997. He became Secretary in
February 1997 and in November 1998 he was
elected Executive Vice President. ▇▇. ▇▇▇▇▇▇▇
was General Counsel, Consumer & Industrial
Segment, and Chief International Counsel of
Teledyne, Inc., where he was employed in the
Corporate Legal Department for more than five
years immediately prior to joining the Company.
------------------------
FOOTNOTES
(1) Drs. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ are sons of ▇▇▇▇ ▇▇▇▇▇.
2. DIRECTORS AND EXECUTIVE OFFICERS OF IRC ACQUISITION CORPORATION. The
following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of the directors and
executive officers of the Purchaser. The business address of each director and
executive officer is ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, unless otherwise
set forth below. Unless otherwise indicated, each occupation or employment set
forth opposite an individual's name refers to occupation or employment with
Purchaser.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS CITIZENSHIP
------------------------------------- -------------------------------------------------- -------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ has been a Director of the Purchaser United States
since incorporation in January 2000. He is the
Chairman and the President of the Purchaser. He
is also on the Board of Overseers for the RAND
Corporation and on the Board of Trustees of the
California Institute of Technology. He is also a
Director and Officer of Parent. See above.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ has been a Director of the Purchaser United States
since incorporation in January 2000. He is
Treasurer and Vice President--Finance of the
Purchaser. He is also an Officer of Parent. See
above.
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ has been a Director of the Purchaser United States
since incorporation in January 2000. He is Vice
President, Secretary and General Counsel of the
Purchaser. He is also an Officer of Parent. See
above.
S-3
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder or his
broker, dealer, commercial bank, trust company or other nominee to the
Depositary at one of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND:
ChaseMellon Shareholder Services, (FOR ELIGIBLE INSTITUTIONS ONLY) ChaseMellon Shareholder Services,
L.L.C. (▇▇▇) ▇▇▇-▇▇▇▇ L.L.C.
Reorganization Department CONFIRM FACSIMILE BY TELEPHONE: ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
P.O. Box 3301 (▇▇▇) ▇▇▇-▇▇▇▇ New York, NY 10271
South Hackensack, NJ 07606 (FOR CONFIRMATION ONLY)
BY OVERNIGHT COURIER:
ChaseMellon Shareholder Services,
L.L.C.
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▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Any questions and requests for assistance or additional copies of the Offer
to Purchase, the Letter of Transmittal and related materials may be directed to
the Information Agent at its address and telephone number set forth below.
Shareholders may also contact their broker, dealer, commercial bank or trust
company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
▇▇▇▇▇▇ & CO., INC.
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Call Collect (▇▇▇) ▇▇▇-▇▇▇▇
Banks and Brokerage Firms, Please Call:
(▇▇▇) ▇▇▇-▇▇▇▇
SHAREHOLDERS PLEASE CALL: (▇▇▇) ▇▇▇-▇▇▇▇
