EXHIBIT (A)(1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AG Associates, Inc.
at
$5.50 Net Per Share
by
MIG Acquisition Corporation
a wholly owned subsidiary of
STEAG Electronic Systems GmbH
THE OFFER, WITHDRAWAL RIGHTS AND PRORATION PERIOD WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 19, 1999, UNLESS THE OFFER
IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER
OF SHARES (AS DEFINED BELOW) WHICH WOULD CONSTITUTE NOT LESS THAN 90% OF THE
SHARES THEN OUTSTANDING (THE "MINIMUM CONDITION") OF AG ASSOCIATES, INC.
(THE "COMPANY"); AND (ii) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE
WAITING PERIODS UNDER THE HSR ACT (AS DEFINED). SEE "CERTAIN CONDITIONS OF
THE OFFER" IN SECTION 14. IN THE EVENT THAT MORE THAN 50% OF THE SHARES
THEN OUTSTANDING ARE TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN,
BUT LESS THAN 90% OF THE SHARES THEN OUTSTANDING ARE ACQUIRED BY
PURCHASER PURSUANT TO THE OFFER AND THE STOCK OPTION DESCRIBED BELOW,
PURCHASER WILL WAIVE THE MINIMUM CONDITION AND AMEND THE OFFER TO
REDUCE THE NUMBER OF SHARES SUBJECT TO THE OFFER TO 3,095,294 SHARES
OR SUCH GREATER OR LESSER NUMBER OF SHARES AS EQUALS 49.9% OF THE
SHARES THEN OUTSTANDING (THE "REVISED MINIMUM NUMBER") AND, IF A
GREATER NUMBER OF SHARES IS TENDERED INTO THE OFFER AND NOT
WITHDRAWN, PURCHASE, ON A PRO RATA BASIS, THE REVISED MINIMUM
NUMBER OF SHARES (IT BEING UNDERSTOOD THAT PURCHASER SHALL NOT IN
ANY EVENT BE REQUIRED TO ACCEPT FOR PAYMENT, OR PAY FOR, ANY
SHARES IF LESS THAN THE REVISED MINIMUM NUMBER OF SHARES ARE
TENDERED PURSUANT TO THE OFFER AND NOT WITHDRAWN AT THE
EXPIRATION OF THE OFFER).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT REFERRED TO HEREIN AND THE TRANSACTIONS CONTEMPLATED THEREBY
(INCLUDING THE OFFER AND THE MERGER), HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING THE
OFFER AND THE MERGER) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND THE SHAREHOLDERS OF THE COMPANY, AND RECOMMENDS THAT
SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
----------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares of common stock, without par value, of the Company (the "Shares")
should either (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it together with the certificate(s) evidencing tendered
Shares, and any other required documents, to the Depositary, or tender such
Shares pursuant to the procedure for book-entry transfer set forth in Section
3, or (2) request such shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such shareholder. Any
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 such Shares.
A shareholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent at the address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from
the Information Agent or from brokers, dealers, commercial banks or trust
companies.
January 22, 1999
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
INTRODUCTION............................................................ 1
1. Terms of the Offer; Proration in Certain Circumstances; Expiration
Date............................................................... 4
2. Acceptance for Payment and Payment for Shares...................... 5
3. Procedures for Accepting the Offer and Tendering Shares............ 7
4. Withdrawal Rights.................................................. 9
5. Certain Federal Income Tax Consequences............................ 10
6. Price Range of Shares; Dividends................................... 10
7. Certain Information Concerning the Company......................... 11
8. Certain Information Concerning Purchaser, Parent and STEAG......... 13
9. Financing of the Offer and the Merger.............................. 15
10. Background of the Offer; Contacts with the Company; the Merger
Agreement; the Stock Option Agreement; and the Voting Agreements... 15
11. Purpose of the Offer; Plans for the Company after the Offer and the
Merger............................................................. 28
12. Dividends and Distributions........................................ 31
13. Effect of the Offer on the Market for the Shares, Exchange Act
Registration and Margin Regulations................................ 31
14. Certain Conditions of the Offer.................................... 32
15. Certain Legal Matters and Regulatory Approvals..................... 34
16. Fees and Expenses.................................................. 36
17. Miscellaneous...................................................... 36
Schedule I. Directors and Executive Officers of STEAG and Purchaser..... I-1
i
TO THE HOLDERS OF COMMON STOCK OF
AG ASSOCIATES, INC.:
INTRODUCTION
MIG Acquisition Corporation, a Delaware corporation ("Purchaser") and a
wholly owned subsidiary of STEAG Electronic Systems GmbH, a corporation
organized under the laws of the Federal Republic of Germany ("Parent"), hereby
offers to purchase all outstanding shares of common stock, without par value
(the "Shares"), of AG Associates, Inc., a California corporation (the
"Company"), at a price of $5.50 per Share (such amount or any greater amount
per Share paid pursuant to the Offer (as defined below), being hereinafter
referred to as the "Offer Price"), net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together with this Offer to Purchase,
constitute the "Offer"). Parent is a wholly owned subsidiary of STEAG
Aktiengesellschaft, a corporation organized under the laws of the Federal
Republic of Germany ("STEAG").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses
of BankBoston, N.A. (the "Depositary") and Corporate Investor Communications,
Inc. (the "Information Agent") incurred in connection with the Offer. See
Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED
THE MERGER AGREEMENT (AS HEREINAFTER DEFINED) AND THE TRANSACTIONS
CONTEMPLATED THEREBY (INCLUDING THE OFFER AND THE MERGER), HAS DETERMINED THAT
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY (INCLUDING THE
OFFER AND THE MERGER) ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND THE SHAREHOLDERS OF THE COMPANY, AND RECOMMENDS THAT SHAREHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES WHICH WOULD CONSTITUTE NOT LESS THAN 90% OF THE SHARES THEN OUTSTANDING
(THE "MINIMUM CONDITION"); AND (ii) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIODS UNDER THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST IMPROVEMENTS
ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT").
IN THE EVENT THAT MORE THAN 50% OF THE SHARES THEN OUTSTANDING ARE TENDERED
PURSUANT TO THE OFFER AND NOT WITHDRAWN, BUT LESS THAN 90% OF THE SHARES THEN
OUTSTANDING ARE ACQUIRED BY PURCHASER PURSUANT TO THE OFFER AND THE STOCK
OPTION DESCRIBED BELOW, PURCHASER WILL WAIVE THE MINIMUM CONDITION AND AMEND
THE OFFER TO REDUCE THE NUMBER OF SHARES SUBJECT TO THE OFFER TO 3,095,294
SHARES OR SUCH GREATER OR LESSER NUMBER OF SHARES AS EQUALS 49.9% OF THE
SHARES THEN OUTSTANDING (THE "REVISED MINIMUM NUMBER") AND, IF A GREATER
NUMBER OF SHARES IS TENDERED INTO THE OFFER AND NOT WITHDRAWN, PURCHASE, ON A
PRO RATA BASIS, THE REVISED MINIMUM NUMBER OF SHARES (IT BEING UNDERSTOOD THAT
PURCHASER SHALL NOT IN ANY EVENT BE REQUIRED TO ACCEPT FOR PAYMENT, OR PAY
FOR, ANY SHARES IF LESS THAN THE REVISED MINIMUM NUMBER OF SHARES ARE TENDERED
PURSUANT TO THE OFFER AND NOT WITHDRAWN AT THE EXPIRATION OF THE OFFER).
1
SoundView Technology Group, Inc. ("SoundView"), the Company's financial
advisor, has delivered to the Board its opinion (the "Fairness Opinion") that,
as of the date of the Fairness Opinion, the consideration to be received by
the holders of the Shares pursuant to the Merger Agreement is fair, from a
financial point of view, to such holders. A copy of the Fairness Opinion is
attached as Appendix A to the Company's Solicitation/ Recommendation Statement
on Schedule 14D-9, which is being mailed to the Company's shareholders
herewith. Shareholders are urged to read the Fairness Opinion in its entirety.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of January 18, 1999 (the "Merger Agreement") among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, upon the
terms and subject to the conditions set forth in the Merger Agreement, and in
accordance with the California General Corporation Law (the "CGCL") and
Delaware General Corporation Law (the "DGCL"), following completion of the
Offer, Purchaser will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation") and will become a wholly owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), (i) each share of common stock, $1.00 par value, of Purchaser issued
and outstanding will be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation, and (ii)
each Share issued and outstanding immediately prior to the Effective Time
(other than (a) Shares held by any subsidiary of the Company, (b) each Share
that is owned by Parent or Purchaser, including Shares purchased by Purchaser
pursuant to the Offer, and (c) Shares held by shareholders who have demanded
and perfected, and have not withdrawn or otherwise lost, dissenters' rights,
if any, under the CGCL) will be cancelled and converted automatically into the
right to receive $5.50 in cash, or any higher price that may be paid per Share
in the Offer, without interest (the "Merger Consideration"). The Merger
Agreement is more fully described in Section 10.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval of the Merger and adoption of the
provisions relating to the Merger in the Merger Agreement by the requisite
vote, if any, of the shareholders of the Company. See Section 11. Under the
CGCL, if pursuant to the Offer, the Stock Option (as defined below) or
otherwise, Purchaser acquires at least 90% of the Shares then outstanding,
Purchaser will be able to approve the Merger and adopt the provisions relating
to the Merger in the Merger Agreement without a vote of the Company's
shareholders, pursuant to the short-form merger provisions under the CGCL. In
such event, Parent, Purchaser and the Company have agreed to 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 Purchaser does not acquire at least 90% of the Shares then outstanding
pursuant to the Offer, the Stock Option or otherwise and if Purchaser waives
the Minimum Condition and amends the Offer to reduce the number of Shares
subject to the Offer to 49.9% of the Shares then outstanding, Purchaser would
own upon consummation of the Offer 49.9% of the Shares then outstanding and
would thereafter solicit the approval of the Merger and adoption of the
provisions relating to the Merger in the Merger Agreement by a vote of the
shareholders of the Company. Under such circumstances, a significantly longer
period of time will be required to effect the Merger. See Section 11.
Under the CGCL, the Merger may not be accomplished for cash paid to the
Company's shareholders if Purchaser or Parent owns directly or indirectly more
than 50% but less than 90% of the Shares then outstanding unless either (i)
all the shareholders consent, or (ii) the Commissioner of Corporations of the
State of California approves, after a hearing, the terms and conditions of the
Merger and the fairness thereof. Accordingly, simultaneously with entering
into the Merger Agreement, and as an inducement to Parent and Purchaser to
enter into the Merger Agreement, the Company entered into a Stock Option
Agreement with Parent and Purchaser, dated as of January 18, 1999 (the "Stock
Option Agreement"). Pursuant to the Stock Option Agreement, the Company
granted to Purchaser an irrevocable option (the "Stock Option") to purchase up
to the number of Shares (the "Option Shares") that, when added to the number
of Shares owned by Purchaser and its affiliates following the consummation of
the Offer, would constitute 90% of the Shares then outstanding
2
(assuming the issuance of the Option Shares) at a cash purchase price per
Option Share equal to $5.50 (the "Purchase Price"), subject to the terms and
conditions set forth in the Stock Option Agreement, including, without
limitation, (i) that the Stock Option will be exercisable if and when at least
80% of the Shares then outstanding have been tendered to Purchaser in the
Offer, and (ii) that the number of Option Shares to be issued thereunder shall
not exceed the number of authorized shares available for issuance.
If the Stock Option is exercised by Purchaser (resulting in Purchaser
acquiring 90% or more of the outstanding Shares), Parent will be able to
effect a short-form merger under the CGCL, subject to the terms and conditions
of the Merger Agreement. Purchaser currently intends to effect a short-form
merger if it is able to do so.
The Merger Agreement provides that, effective upon the purchase by Purchaser
of Shares pursuant to the Offer, Purchaser will be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board
for the period following such purchase as will give Purchaser representation
on the Board equal to the product of (i) the total number of directors on the
Board (giving effect to the election of any additional directors and/or
resignation of existing directors pursuant to the Merger Agreement), and (ii)
the percentage that the aggregate number of Shares beneficially owned by
Purchaser (including Shares accepted for payment) and Parent bears to the
total number of Shares then issued and outstanding. In the Merger Agreement,
the Company has agreed to take all actions necessary to cause Purchaser's
designees to be so appointed or elected to the Board, to each committee of the
Board (other than any committee established to take action under the Merger
Agreement), to each board of directors of each Subsidiary (as defined in the
Merger Agreement) and to each committee of each such board. In addition, the
Company has agreed that, until the Effective Time, the Board shall have at
least two directors who are directors on the date of the Merger Agreement and
who are not employees of the Company or any of the Company's Subsidiaries, or
affiliates of Purchaser or Parent.
The Company has advised Purchaser that, as of January 15, 1999, 6,202,993
Shares were issued and outstanding and 1,009,900 Shares were reserved for
issuance pursuant to issued and outstanding stock options granted by the
Company to employees and directors under the Company's 1993 Employee Stock
Option Plan and 1994 Directors Stock Option Plan. As provided in the written
agreements to be entered into by the Company, certain employees of the Company
and all officers of the Company prior to the Effective Time, all outstanding
options as of the Effective Time held by such employees and officers under the
1993 Employee Stock Option Plan (the "Existing Stock Options") will be
terminated and cancelled in exchange for a cash bonus which will be payable on
the date which is twelve months after the Effective Time, provided that such
employees continue to be employed by the Company on such date; provided,
however, that the aggregate amount the Company or the Surviving Corporation
agrees to pay as of the Effective Time will not exceed $2,040,000. See Section
10--The Merger Agreement.
As of January 15, 1999, the Minimum Condition would be satisfied if
Purchaser acquired 5,582,694 Shares. 3,101,497 Shares would constitute 50% of
the Shares issued and outstanding on such date (assuming no Existing Stock
Options are exercised on or prior to such date). Certain shareholders of the
Company, holding in the aggregate approximately 45% of the Shares as of
January 15, 1999, have each entered into a Voting Agreement (as defined below)
with Parent pursuant to which each such shareholder has agreed to tender its
Shares pursuant to the Offer, and to vote, and has granted irrevocable proxies
to vote, its Shares in favor of the Merger. See Section 10--The Voting
Agreements.
Concurrently with the execution of the Merger Agreement, the Company granted
to Parent an option (subject to certain restrictions on vesting) to purchase
an aggregate of 600,000 Shares at an exercise price of $2.00 per Share (the
"Common Stock Option"). Additionally, subject to the occurrence of certain
events, the Company and Parent agreed to an option whereby either (a) Parent
will be entitled to purchase from the Company, and the Company will be
obligated to sell to the Parent, all of the ordinary shares of AG Associates
(Israel), Ltd., an entity formed under the laws of Israel and a subsidiary of
the Company (the "Israeli Affiliate"), held by the Company for the aggregate
purchase price of $5,404,770 or (b) the Company will have the right to sell to
Parent, and Parent will be obligated to purchase from the Company, such shares
of the Israeli Affiliate for the same aggregate purchase price. See Section
11--Company Stock Option and AGI Option.
3
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. Terms of the Offer; Proration in Certain Circumstances; 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), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date (as defined below) and not withdrawn as
permitted by Section 4. The term "Expiration Date" means 12:00 midnight, New
York City time, on Friday, February 19, 1999, unless and until Parent or
Purchaser, in its sole discretion (but subject to the terms and conditions of
the Merger Agreement), shall have extended the period 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 Parent or Purchaser, shall
expire.
In the event Purchaser amends the Offer as described above such that
Purchaser offers to purchase the Revised Minimum Number of Shares, such
decrease in the number of Shares being sought will be applicable to all
shareholders whose Shares are accepted for payment pursuant to the Offer. If
at the time the notice of any such decrease in the number of Shares being
sought is first published, sent or given to holders of such Shares, the Offer
is scheduled to expire at any time earlier than the period ending on the tenth
business day from and including the date that such notice is first so
published, sent or given, the Offer will be extended at least until the
expiration of such ten business day period. Upon the terms and subject to the
conditions of such amended Offer, if more than the Revised Minimum Number of
Shares shall be validly tendered and not withdrawn prior to the Expiration
Date, the Shares so tendered shall be purchased as provided in Section 2 on a
pro rata basis (adjusted to avoid the purchase of fractional shares). Because
of the difficulty of determining the precise number of Shares properly
tendered, Purchaser does not expect to be able to announce the final proration
factor until approximately five trading days after the Expiration Date.
Preliminary results of proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders can obtain
such information from their brokers. Purchaser will not pay for any Shares
accepted for payment pursuant to the Offer until the final proration factor is
known. For purposes of this Offer to Purchase, "trading day" shall mean any
day on which the Nasdaq National Market ("NASDAQ") is open for business.
Purchaser and Parent expressly reserve the right, in their discretion (but
subject to the terms and conditions of the Merger Agreement), at any time and
from time to time, to extend for any reason the period of time during which
the Offer is open, including the occurrence of any of the conditions specified
in Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw his or her Shares. See Section 4.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted
for payment, payment for, any Shares pending receipt of any regulatory
approval specified in Section 15, (ii) to terminate the Offer and not accept
for payment any Shares upon the occurrence of any of the conditions specified
in Section 14 prior to the Expiration Date, and (iii) to delay, terminate or
waive the Minimum Condition or any other condition or otherwise amend the
Offer including extending the Expiration Date in any respect, by giving oral
or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. The Merger Agreement
provides that Purchaser will not (i) impose conditions in addition to those
set forth in Section 14, (ii) reduce the Offer Price or the amount of Shares
sought in the Offer, or (iii) change the form of consideration payable in the
Offer.
Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), requires Purchaser either to pay
the consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer, and (ii) Purchaser may not delay
acceptance for
4
payment of, or payment for (except as provided in clause (i) of the preceding
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 public announcement thereof, such announcement
in the case 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.
Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) 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 Purchaser may choose to make any
public announcement, 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 Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage
of securities sought, will depend upon the facts and circumstances, including
the relative materiality of the terms or information changes. With respect to
a change in price or a change in percentage of securities sought, a minimum
ten business day period is generally required to allow for adequate
dissemination to shareholders and investor response.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to decrease the number of Shares being sought or
to increase or decrease the consideration being offered in the Offer, such
decrease in the number of Shares being sought or such increase or decrease in
the consideration being offered will be applicable to all shareholders whose
Shares are accepted for payment pursuant to the Offer and, if at the time
notice of any such decrease in the number of Shares being sought or such
increase or decrease in the consideration being offered is first published,
sent or given to holders of such Shares, the Offer is scheduled to expire at
any time earlier than the period ending on the tenth business day from and
including the date that such notice is first so published, sent or given, the
Offer will be extended at least until the expiration of such ten business day
period. For purposes of the Offer, except as otherwise provided herein, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New
York City time.
The Company has provided 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 and the related Letter of
Transmittal 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.
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), Purchaser will accept for payment, and will pay for, all Shares
validly tendered prior to the Expiration Date and not properly withdrawn
promptly after the latest to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions to the Offer set forth in Section 14.
Notwithstanding the immediately preceding sentence and subject to applicable
rules of the Commission and the terms of the Merger Agreement, Purchaser
expressly reserves the right to delay acceptance for payment of, or payment
for, Shares pending receipt of any regulatory approvals specified in Section
15 or in order to comply in whole or in part with any other applicable law.
5
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 into the Depositary's account at The Depositary 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 under the Letter of
Transmittal.
On January 21, 1999, Parent filed, and on January 22, 1999, the Company
filed, with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice (the "Antitrust Division") a Premerger
Notification and Report Form under the HSR Act with respect to the Offer. It
is anticipated that the waiting period under the HSR Act applicable to the
Offer will expire at 11:59 p.m., New York City time, on February 4, 1999. If
Purchaser acquires 50% or more of the Shares then outstanding in the Offer, no
separate waiting period will apply to the subsequent purchase of Shares
pursuant to the Stock Option Agreement. Prior to the expiration or termination
of any such waiting period, the FTC or the Antitrust Division may extend any
such waiting period by requesting additional information from Parent or the
Company with respect to the Offer or the Stock Option Agreement. If such a
request is made with respect to the purchase of Shares in the Offer, the
waiting period will expire at 11:59 p.m., New York City time, on the tenth
calendar day after substantial compliance by Parent or the Company with such a
request. Thereafter, the FTC or Antitrust Division must obtain a court order
to prevent Purchaser from consummating the acquisition of Shares pursuant to
the Offer. The waiting period under the HSR Act may be terminated prior to its
expiration by the FTC and the Antitrust Division. Parent and the Company have
requested early termination of the waiting period, although there can be no
assurance that this request will be granted. See Section 15 for additional
information regarding the HSR Act.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares 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
Purchaser and transmitting such payments to tendering shareholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid, regardless of any delay in making such
payment.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, Purchaser's obligation to make such
payment shall be satisfied, and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. If, for any reason
whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under
Section 1, the Depositary may, nevertheless, on behalf of Purchaser, retain
tendered Shares, and, subject to compliance with the applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
such Shares may not be withdrawn, except to the extent that the tendering
shareholders are entitled to withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered or accepted for purchase as
provided in this Section 2, Share Certificates evidencing unpurchased Shares
will be returned, without expense to the tendering shareholder (or, in the
case of Shares tendered by book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 3, such Shares will be credited to an account maintained at the Book-
Entry Transfer Facility), as promptly as practicable following the expiration
or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the price being paid
for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all shareholders whose Shares are purchased
pursuant to the Offer.
6
Purchaser reserves the right to transfer or assign, in whole or, from time
to time, in part, to one or more of its 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 Purchaser of its obligations under the
Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
3. Procedures for Accepting the Offer and Tendering Shares.
Valid Tender. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), together 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, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either (i)
the Share Certificates evidencing tendered Shares must be received by the
Depositary at such address or such 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 prior to the
Expiration Date, or (ii) the tendering shareholder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY 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.
Book-Entry Transfer. The Depositary will establish accounts 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 a 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 procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer at the Book-Entry
Transfer Facility, the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer,
and any other required documents, 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 prior to the Expiration Date, or the tendering shareholder must
comply with the guaranteed delivery procedure 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.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that
Purchaser may enforce such agreement against the participant.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution", as such term is
defined in Rule 17Ad-5 promulgated under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution"), except in cases
where Shares are tendered (i) by a registered holder of Shares who has not
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal, or (ii)
for the account of an Eligible Institution. If a Share Certificate is
registered in the name of a person other than the signer of the Letter of
Transmittal, if payment is to be made, or if a Share Certificate not accepted
for payment or not tendered is to be returned, to a person other than the
7
registered holder(s), then the Share Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Share Certificate, with the
signature(s) on such Share Certificate or stock powers guaranteed by an
Eligible Institution. 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 evidencing such Shares are
not immediately available or such shareholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such shareholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered, provided that all the following conditions are
satisfied:
(i)such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with a properly completed and duly executed Letter of Transmittal (or
a facsimile thereof) 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 are received by
the Depositary within three trading days after the date of execution
of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
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 the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) 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.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Depositary on behalf of Purchaser,
which determination shall be final and binding on all parties. 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. Purchaser also reserves the absolute
right to waive any condition of the Offer or any defect or irregularity in the
tender of any 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 been validly made until all defects
and irregularities have been cured or waived. None of Purchaser, Parent, the
Depositary, the Information Agent nor 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. 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.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
shareholder irrevocably appoints designees of Purchaser as such shareholder's
proxies, each 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
Purchaser (and with respect to any and all other Shares or other securities
issued or issuable in respect of such Shares on or after January 18, 1999).
All such proxies shall be considered coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
Purchaser accepts such Shares for payment. Upon such acceptance for payment,
all prior powers of attorney, proxies and consents given by such shareholder
with respect to such Shares (and such other Shares and securities) will be
revoked without further
8
action, and no subsequent powers of attorney, proxies and consents may be
given nor any subsequent written consent executed by such shareholder (and, if
given or executed, will not be deemed to be effective) with respect thereto.
The designees of Purchaser will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such 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. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Backup Withholding. To prevent backup Federal income tax withholding with
respect to payment to certain shareholders of the purchase price of shares
purchased pursuant to the Offer, each such shareholder must provide the
Depositary with such shareholder's correct taxpayer identification number and
certify that such shareholder is not subject to backup Federal income tax
withholding by completing the Substitute Form W-9 in the Letter of
Transmittal. See Section 5 of this Offer to Purchase. If the shareholder is a
nonresident alien or foreign entity not subject to back-up withholding, the
shareholder must give the Depositary a completed Form W-8 Certificate of
Foreign Status prior to receipt of any payments.
4. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after March 22, 1999. If Purchaser extends
the Offer, is delayed in its acceptance for payment of Shares or is unable to
accept Shares for payment pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent that tendering shareholders are
entitled to withdrawal rights as described in this Section 4. Any such delay
will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to
Purchase. Any such 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 of such Shares, 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.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, 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.
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 prior to the Expiration Date by following one of the
procedures described in Section 3.
9
5. Certain Federal Income Tax Consequences.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable transaction for Federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a shareholder will recognize gain or loss for Federal income tax
purposes equal to the difference between the amount of cash received in
exchange for the Shares sold and such shareholder's adjusted tax basis in such
Shares. For Federal income tax purposes, such gain or loss will be a capital
gain or loss if the Shares are a capital asset in the hands of the
shareholder, and a long-term capital gain or loss if the shareholder's holding
period is more than one year as of the date Purchaser accepts such Shares for
payment pursuant to the Offer or the Effective Time, as the case may be.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
SHAREHOLDERS, INCLUDING FINANCIAL INSTITUTIONS, BROKER-DEALERS, SHAREHOLDERS
WHO ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR
OTHERWISE AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF
THE UNITED STATES AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO
THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND
STATE, LOCAL AND FOREIGN TAX LAWS.
6. Price Range of Shares; Dividends.
The Shares are traded on NASDAQ under the symbol "AGAI." The following table
sets forth, based upon public sources, for the fiscal quarters indicated, the
high and low bid prices per Share:
High/Ask Low/Bid
-------- -------
Fiscal 1997:
First Quarter............................................ $7.13 $4.75
Second Quarter........................................... 7.00 4.88
Third Quarter............................................ 5.98 4.38
Fourth Quarter........................................... 7.94 5.75
Fiscal 1998:
First Quarter............................................ $7.13 $4.13
Second Quarter........................................... 4.88 3.75
Third Quarter............................................ 3.94 1.63
Fourth Quarter........................................... 3.56 2.13
Fiscal 1999:
First Quarter............................................ $5.00 $2.00
On January 15, 1999, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing bid price per Share as reported on NASDAQ was $4.38. On
January 21, 1999, the last full trading day prior to the commencement of the
Offer, the closing bid price per Share as reported on NASDAQ was $5.28.
The Company has never paid dividends on the Shares and its present policy is
to retain earnings to finance its future operations.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
10
7. Certain Information Concerning the Company.
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase, including financial information, has been
furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Neither Purchaser nor Parent assumes any responsibility for the
accuracy or completeness of the information concerning the Company furnished
by the Company or contained in such documents and records or for any failure
by the Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Purchaser or Parent.
General. The Company is a California corporation with its principal
executive offices located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-
▇▇▇▇. According to the Company's annual report on Form 10-K for the fiscal
year ended September 30, 1998 (the "1998 Form 10-K"), the Company designs,
manufactures, markets and supports advanced single-wafer rapid thermal
processing equipment used in manufacturing integrated circuits.
Historical Financial Information. Set forth below is certain selected
consolidated financial data relating to the Company and its Subsidiaries. The
selected consolidated financial data as of and for the years ended September
30, 1995 to 1998 have been excerpted or derived from the audited financial
statements contained in the 1998 Form 10-K and the Company's Form 10-K for the
fiscal year ended September 30, 1997. The selected consolidated financial data
as of and for the three months ended December 31, 1997 and 1998 have been
derived from unaudited financial statements that have been prepared on the
same basis as the audited financial statements and, in the opinion of the
Company, include all adjustments necessary for a fair statement of the results
for the unaudited periods. Operating results for the three months ended
December 31, 1998 are not necessarily indicative of the results that may be
expected for the entire year ending September 30, 1999. More comprehensive
financial information is included in the Form 10-K and other documents filed
by the Company with the Commission. The financial data that follow are
qualified in their entirety by reference to such reports and other documents,
including the financial statements and related notes 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.
AG ASSOCIATES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
For the Fiscal
Quarter Ended For the Fiscal
December 31, Years Ended September 30,
---------------- -----------------------------------
1998 1997 1998 1997 1996 1995
------- ------- -------- -------- ------- -------
(in thousands)
Consolidated Statement of
Operations Data:
Net sales.............. $14,328 $16,433 $ 45,957 $ 49,604 $71,089 $62,725
Gross profit........... 5,141 6,248 12,962 16,907 31,724 29,028
Research and
development........... 3,129 3,948 15,908 14,329 16,653 8,893
Selling, general and
administrative........ 2,294 2,361 9,573 9,247 10,204 10,562
Income (loss) from
operations............ (282) (61) (12,519) (6,669) 4,867 9,573
Income (loss) before
income taxes.......... (369) 15 (12,494) (6,237) 4,487 9,221
Net income (loss)...... $ (369) $ 9 $(14,000) $ (4,687) $ 2,743 $ 9,753
Net income (loss) per
share--basic.......... $ (0.06) -- $ (2.29) $ (0.78) $ 0.47 $ 2.22
Shares used in per
share calculation--
basic................. 6,203 6,066 6,102 5,981 5,582 4,305
Net income (loss) per
share--diluted........ $ (0.06) -- $ (2.29) $ (0.78) $ 0.45 $ 2.05
Shares used in per
share calculation--
diluted............... 6,203 6,132 6,102 5,981 6,140 4,770
Consolidated Balance
Sheet Data:
Cash, cash equivalents
and short-term
investments........... $ 2,616 $ 6,406 $ 1,332 $ 4,157 $11,985 $18,858
Working capital
(deficiency).......... $ 7,350 $22,338 $ 8,306 $ 22,867 $26,851 $28,649
Total assets........... $36,357 $43,025 $ 30,770 $ 42,947 $45,852 $48,825
Long-term obligations.. -- $ 234 -- $ 275 $ 11 $ 193
Convertible
subordinated
debentures............ -- -- -- -- -- --
Minority interest in
subsidiary............ -- -- -- -- -- --
Shareholders' equity
(deficiency).......... $17,535 $31,547 $ 17,902 $ 31,522 $35,694 $32,300
11
Projected Financial Information. In connection with ▇▇▇▇▇▇'s review of the
Company and in the course of the negotiations between the Company and Parent
described in Section 10, the Company provided Parent with certain business and
financial information which Parent and Purchaser believe is not publicly
available, including the following projections of future financial
performance:
Fiscal Year September 30,
------------------------------------
1997 1998 1999
------- -------- -----------
(U.S. dollars in
thousands) (actual) (estimated)
Net Sales................ $49,604 $ 45,957 $63,432
% Growth................ -- (7)% 38%
Gross Profit............. $16,907 $ 12,962 $24,731
as a % of sales......... 34 % 28 % 39%
Income from operations... $(6,669) $(12,519) $ 5,354
as a % of sales......... (13)% (27)% 8%
Net income............... $(4,687) $(14,000) $ 4,894
as a % of sales......... (9)% (30)% 8%
THE FISCAL 1999 PROJECTED INFORMATION IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND
MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WILL BE REALIZED OR THAT ACTUAL RESULTS
WILL NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS DO NOT GIVE EFFECT TO THE OFFER OR THE MERGER,
WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE
PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND
FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY BECAUSE SUCH
INFORMATION WAS MADE AVAILABLE TO PARENT BY THE COMPANY. MOREOVER, NEITHER
PURCHASER NOR PARENT OR ANY OF THEIR RESPECTIVE AFFILIATES RELIED UPON THE
FOREGOING PROJECTIONS PREPARED BY THE COMPANY IN ANY WAY IN FORMULATING THE
OFFER. NONE OF PARENT, PURCHASER, THE COMPANY OR ANY OTHER PARTY ASSUMES ANY
RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS. THE
INCLUSION OF THE FOREGOING PROJECTIONS SHOULD NOT BE REGARDED AS AN INDICATION
THAT PARENT, PURCHASER, THE COMPANY OR ANY OTHER PERSON WHO RECEIVED SUCH
INFORMATION CONSIDERS IT AN ACCURATE PREDICTION OF FUTURE EVENTS. NONE OF
PARENT, PURCHASER OR THE COMPANY INTENDS TO UPDATE, REVISE OR CORRECT SUCH
PROJECTIONS IF THEY BECOME INACCURATE (EVEN IN THE SHORT TERM).
The management of the Company has advised Parent that it is difficult to
assess the accuracy of the Company's projections for the second half of its
fiscal year ending September 30, 1999 due to current conditions in the
semiconductor manufacturing industry.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required 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 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 proxy
statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information are available
for inspection at the public reference facilities maintained by the Commission
at Room 1024, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, and also are
available for inspection at the Commission's regional offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Commission
also maintains an Internet site on the World Wide Web at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇
that
12
contains reports, proxy statements and other information. Copies of such
materials may also be obtained by mail, upon payment of the Commission's
customary fees, by writing to its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The information also is available for inspection at
the offices of The Nasdaq Stock Market at ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇,
▇.▇. ▇▇▇▇▇.
8. Certain Information Concerning Purchaser, Parent and STEAG.
Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. The principal offices
of Purchaser are located at c/o Morrison & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Purchaser is a wholly owned subsidiary of
Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is a corporation organized under the laws of the Federal Republic of
Germany. Its principal offices are located at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇. Parent is a worldwide leading supplier of machines for the
production of semiconductors, compact discs and photomasks. STEAG has
organized its electronic systems division (see below) within Parent, a holding
company for STEAG AST Elektronik GmbH ("AST"), STEAG MicroTech GmbH and STEAG
HamaTech GmbH and their foreign sales and service affiliate companies. Parent
is a wholly owned subsidiary of STEAG.
STEAG has been in the business of power generation since 1937 and has
focused its activities on reliable, efficient and ecologically safe generation
of electrical and thermal energy. In addition to its core business of power
generation, STEAG also is extending its range of business to become an
international operator in the independent power producer field and in
electronic systems/process technology. STEAG is organized into three separate
business divisions: power generation, independent power production and
electronic systems/process technology.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the executive officers, and
members of the supervisory board and management board of Purchaser and STEAG,
respectively, and certain other information are set forth in Schedule I
hereto.
STEAG is not subject to the informational reporting requirements of the
Exchange Act, and, accordingly, does not file reports or other information
with the Commission relating to its business, financial condition and other
matters.
13
Set forth below is certain selected consolidated financial information
relating to STEAG and its subsidiaries for STEAG's last two fiscal years. The
selected consolidated financial information has been prepared in Deutsche Mark
in accordance with generally accepted accounting principles in the Federal
Republic of Germany ("German GAAP"). German GAAP differs in certain
significant respects from generally accepted accounting principles in the
United States ("U.S. GAAP"). A summary of the significant differences between
U.S. GAAP and German GAAP is set forth below. Parent, however, believes that
the differences are not material to a decision by a holder of Shares of
whether to sell, tender or hold any Shares because any such differences would
not affect the ability of Purchaser to obtain sufficient funds to pay for
Shares to be acquired pursuant to the Offer. The amounts in the table set
forth below are in Deutsche Mark unless otherwise indicated.
STEAG AG
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in Deutsche Mark ("DM"), except where otherwise indicated
in United States dollars ("$"))
Year Ended December 31,
-------------------------
▇▇▇▇(▇) ▇▇▇▇ ▇▇▇▇
------- -------- --------
(in millions)
Income Statement Data:
Amounts in accordance with German GAAP:
Sales............................................... $1,503 DM 2,700 DM 2,514
Net income.......................................... 49 88 83
Net income available for distribution............... 22 40 35
Balance Sheet Data:
Amounts in accordance with German GAAP:
Liquid funds........................................ $ 504 DM 906 DM 588
Current assets...................................... 257 462 415
Total assets........................................ 2,309 4,147 3,622
Long-term financial liabilities..................... 648 1,164 639
Shareholders' equity................................ 523 939 870
--------
(1) Amounts in this column are unaudited and have been translated solely for
the convenience of the reader at an exchange rate of DM 1,7961 = $1.00,
the Noon Buying Rate on December 30, 1997. No representation is made that
the Deutsche Mark has been, could have been or could be, converted into
U.S. dollars at that or any other rate.
The following represents, in the opinion of management of STEAG, the
significant differences between U.S. GAAP and German GAAP that would affect
the determination of consolidated net income and shareholders' equity of STEAG
for the periods for which the selected consolidated financial information has
been presented herein.
Fixed Assets. German GAAP permits, but does not require, the capitalization
of interest as a part of the historical cost of acquisition of assets that are
constructed or produced for an enterprise's own use. The capitalization of
such interest costs is required by U.S. GAAP.
Long-Term Construction Contracts. Under U.S. GAAP, accounting for work in
process and finished goods under the percentage-of-completion method is the
preferred method when estimates of costs to complete and extent of progress
toward completion of long-term contracts are reasonably dependable. Under
German GAAP, accounting for work in process and finished goods is determined
using the completed contract method.
Accruals. Under German GAAP, the valuation of accruals is characterized by
the prudency principle. This, as a general rule, would lead to higher accruals
than would be acceptable under U.S. GAAP. Accruals for certain expenses that
are incurred in the current year but that will only lead to cash outflow in
future years are acceptable under German GAAP without an underlying liability
towards third parties. These accruals are not acceptable under U.S. GAAP.
14
Pension Plans. U.S. GAAP requires pension costs to be recognized and
computed as stipulated by the Statement of Financial Accounting Standard No.
87. Under German GAAP, the unfunded accumulated benefit obligation, accounted
by STEAG, did not reflect forecasted increase of wages and salaries and is
discounted with a steady interest rate of 6%.
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent, STEAG or, to the knowledge of Purchaser and Parent, any of the persons
listed in Schedule I to this Offer to Purchase or any associate or majority-
owned subsidiary of Purchaser, Parent, STEAG or any of the persons so listed
beneficially owns or has any right to acquire, directly or indirectly, any
Shares, and (ii) none of Purchaser, Parent, STEAG or, to the knowledge of
Purchaser and Parent any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement, the Common Stock Option and the
Stock Option Agreement and as otherwise described in this Offer to Purchase,
none of Purchaser, Parent, STEAG or, to the knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to this Offer to Purchase, has any
contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company, including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, since October 1, 1995, none of Purchaser, Parent, STEAG or, to the
best knowledge of Purchaser and Parent, any of the persons listed on Schedule
I hereto, has had any business relationship or transaction with the Company or
any of its executive officers, directors or affiliates that is 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, since October 1, 1995,
there have been no contacts, negotiations or transactions between any of
Purchaser, Parent, STEAG, or any of their respective subsidiaries or, to the
best knowledge of Purchaser and Parent, any of the persons listed in Schedule
I to this Offer to Purchase, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of assets.
9. Financing of the Offer and the Merger.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be
approximately $35,279,784. Purchaser will obtain all of such funds from
Parent. Parent will obtain all of such funds from STEAG. STEAG will supply
such funds from working capital and other cash on hand.
10. Background of the Offer; Contacts with the Company; the Merger Agreement;
the Stock Option Agreement; and the Voting Agreements.
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
In connection with the conduct of its business, Parent regularly receives
information concerning potential acquisition candidates in the field of
electronic systems and process technology.
On July 15, 1998, during the SEMICON/West conference in San Francisco,
California, ▇▇. ▇▇▇▇▇ ▇▇▇, the Chief Executive Officer of the Company,
approached ▇▇. ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇, the Chief Executive Officer of Parent, and
inquired whether Parent would be interested in exploring a potential business
combination with the Company. ▇▇. ▇▇▇▇ expressed an interest in discussing
such a combination.
On July 17, 1998, ▇▇▇▇▇▇▇▇▇ provided to Parent a confidential memorandum
relating to the Company, its business and its financial results and prospects.
On July 22, 1998, SoundView sent a letter to ▇▇. ▇▇▇▇ describing certain
structures for a business combination between Parent and the Company.
15
On July 31, 1998 and August 3, 1998, ▇▇. ▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇, Chief Financial
Officer of Parent, contacted Mr. ▇▇▇▇ ▇▇▇▇▇▇▇, Vice President, Finance and
Chief Financial Officer of the Company, to schedule preliminary due diligence
of the Company.
On August 6, 1998, Parent and Company entered into a mutual non-disclosure
agreement. On August 6 and 7, 1998, Parent, together with its advisors and
auditors, met and conducted preliminary due diligence at the Company, which
included presentations by management of the Company and a tour of the
Company's plant in San ▇▇▇▇. Representatives of SoundView also were present at
such meeting.
From August 8 to September 8, 1998, Dr. ▇▇▇ and representatives of SoundView
continued to respond to, and engage in meetings with respect to, technical,
legal and financial due diligence requests from Parent.
On September 8 and 9, 1998, ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President of the Company,
and ▇▇. ▇▇▇▇▇▇▇ met with ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇,
representatives of Parent, and a representative of ▇▇▇▇▇▇ Roja Corporation
("▇▇▇▇▇▇ Roja"), an investment banking firm engaged by Parent to advise it in
connection with the proposed business combination with the Company, to discuss
business issues and possible transaction structures. Representatives of
SoundView also participated in such meetings. At such meetings, actual and
forecast data of AST, a wholly owned subsidiary of Parent which designs,
manufactures and distributes RTP systems, and the Company were presented and
discussed.
From September 12 to October 19, 1998, representatives of the Company,
SoundView, Parent and ▇▇▇▇▇▇ Roja continued to discuss possible transaction
structures, including a cash tender offer and a merger whereby Parent would
hold a majority of the then outstanding Shares and the remaining Shares would
continue to be held by the Company's public shareholders.
On October 8 and 9, 1998, Dr. ▇▇▇ and Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ visited
AST in Dornstadt, Germany. Management of AST gave a presentation which
included actual and projected financials of AST. The visit also included a
tour of the AST plant.
On October 12, 1998, members of the management of Parent and a
representative of ▇▇▇▇▇▇ Roja met with representatives of the Company and
SoundView in Essen, Germany. At the meeting the parties discussed alternative
transaction structures and the range of valuation ratios between the Company
and AST.
On October 13, 1998, Dr. ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, Chief Executive Officer of Clal
Electronics, met in Essen, Germany with representatives of STEAG to discuss
issues relating to the existing contractual relationship between the Company
and the Israeli Affiliate. Clal Electronics is a shareholder of the Israeli
Affiliate.
▇▇▇▇▇ held a management board meeting on October 16, 1998. After that
meeting, ▇▇. ▇▇▇▇ discussed with Dr. ▇▇▇ the range of valuation ratios between
the Company and AST that might be acceptable to Parent. ▇▇. ▇▇▇▇ stated that
▇▇▇▇▇ would consider proposing a cash tender offer of $5.50 per Share, subject
to a satisfactory resolution of certain due diligence issues.
On October 23, 1998, Dr. ▇▇▇ discussed the proposed transaction with ▇▇.
▇▇▇▇. On November 3, 1998, ▇▇▇▇▇▇'s U.S. legal counsel, delivered a draft term
sheet to the Company's legal counsel. The draft term sheet proposed that
Parent acquire the Company for cash consideration of $5.50 per Share subject
to the resolution of a number of diligence and business issues. From October
24 to November 19, 1998, representatives of the Company, Parent and their
respective investment bankers and legal counsel had numerous conversations and
meetings regarding due diligence and business issues with respect to the
proposed business combination, including the structure of the transaction and
the Company's agreements and arrangements with the Israeli Affiliate. Although
no letter of intent was signed, substantially all of the business issues
(other than the structure of the transaction and conditions to completing the
acquisition) were resolved at a meeting held on November 19, 1998, among
Drs. ▇▇▇ and ▇▇▇▇, representatives of the Company's and ▇▇▇▇▇▇'s respective
legal counsel and a representative of SoundView.
16
On November 11 and 12, 1998, representatives of Parent visited the Israeli
Affiliate where management of the Israeli Affiliate gave a presentation and
conducted a plant visit.
From November 16 to 20, 1998, representatives of Parent and its accountants,
legal counsel and investment bankers engaged in comprehensive due diligence at
the Company's offices in San ▇▇▇▇.
On November 21, 1998, ▇▇▇▇▇▇'s U.S. legal counsel distributed a first draft
of a merger agreement to the Company, Parent and their respective investment
bankers and legal counsel which draft agreement provided for the acquisition
of the Company by Parent by way of a merger. On December 3, 1998, ▇▇▇▇▇▇'s
U.S. legal counsel distributed another draft of the Merger Agreement to the
Company, Parent and their respective investment bankers and legal counsel,
which provided for the Offer, the Merger and other Transactions. The terms of
the Merger Agreement and related agreements, including the transaction
structure and conditions to completing the acquisition, were negotiated during
the period from November 21, 1998 to January 14, 1999.
On November 25, 1998, to address market rumors and with the consent of
Parent, the Company issued a press release indicating that it was in
discussions with Parent concerning a possible cash acquisition of the Company.
At the time, the structure of the transaction and the conditions to completing
the acquisition had not been fully determined. On the same day, Dr. ▇▇▇, ▇▇.
▇▇▇▇, a representative of Clal Electronics, representatives of the Israeli
Affiliate, and an investor in the Israeli Affiliate met in Essen, Germany. At
the meeting, ▇▇▇▇▇▇ and the Israeli Affiliate agreed in principle to an
arrangement pursuant to which, concurrently with or immediately following the
Merger, Parent would acquire all of the outstanding capital stock of the
Israeli Affiliate not owned by the Company.
On December 3, 1998, the Supervisory Board of STEAG met and approved the
general terms of the Merger Agreement and the Transactions, including the
Offer and the Merger.
On January 18, 1999, the Company, Parent and Purchaser entered into the
Merger Agreement.
17
THE MERGER AGREEMENT
The following summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit
(c)(1) to the Schedule 14D-1 and is incorporated by reference in this Offer to
Purchase. For purposes of the Merger Agreement, "Subsidiary" is defined as any
corporation, partnership, joint venture or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at
the time owned by the Company and/or one or more other direct or indirect
Subsidiaries, and "Material Adverse Effect" is defined as an effect on the
business, assets, condition (financial or other), operating results or
prospects of the Company that is material and adverse to the value of the
Company and its Subsidiaries, taken as a whole, other than the direct effects
of (i) the announcement of the Transactions (as defined in the Merger
Agreement), (ii) general economic conditions, or (iii) conditions that are
generally applicable to the business segments in which the Company or its
Subsidiaries conducts business, excluding the effect on the Company of general
business declines or reverses, such as lower than forecast revenues or
bookings (whether as a result of economic conditions, actions of competitors
or business interruptions), reductions in gross margins or technical problems
with product development, introduction or evaluation or increases in operating
expenses attributable to changes in product shipment volumes or changes in
supplier pricing.
The Offer. Purchaser is making the Offer to purchase the Shares, as required
by Article I of the Merger Agreement. The Merger Agreement provides that
Parent will cause Purchaser to commence the Offer as promptly as reasonably
practicable, but in no event later than five business days, after the date of
the public announcement of the terms of the Merger Agreement. The obligation
of Purchaser and Parent to accept for payment, and pay for, the Shares
tendered pursuant to the Offer is subject to the satisfaction of (i) the
Minimum Condition or Revised Minimum Number of Shares prior to the expiration
of the Offer, and (ii) certain other conditions described in Section 14.
Subject to the terms and conditions of the Merger Agreement and the applicable
regulations of the Commission, Purchaser and Parent also expressly reserve the
right, at any time and from time to time, (i) to delay acceptance for payment
of, or, regardless of whether such Shares were accepted for payment, payment
for, any Shares pending receipt of any regulatory approval specified in
Section 15, (ii) to terminate the Offer and not accept for payment any Shares
upon the occurrence of any of the conditions specified in Section 14 prior to
the Expiration Date, and (iii) to delay, terminate or waive the Minimum
Condition or any other condition or otherwise amend the Offer including
extending the Expiration Date in any respect. Furthermore, Purchaser will not
(i) impose conditions in addition to those set forth in Section 14, (ii)
reduce the Offer Price or the number of Shares sought in the Offer, or (iii)
change the form of consideration payable in the Offer.
Notwithstanding any other provision contained in the Merger Agreement, in
the event the Minimum Condition is not satisfied on any scheduled Expiration
Date, Purchaser will either extend the Expiration Date or amend the Offer to
provide that, in the event (i) the Minimum Condition is not satisfied at the
next scheduled Expiration Date (after giving effect to the issuance of any
Shares issued under the Stock Option Agreement), and (ii) the number of Shares
tendered pursuant to the Offer and not withdrawn as of such next scheduled
Expiration Date is more than 50% of the Shares then outstanding, Purchaser
will waive the Minimum Condition, reduce the number of Shares subject to the
Offer to the Revised Minimum Number of Shares and, if a greater number of
Shares is tendered in the Offer and not withdrawn, purchase, on a pro rata
basis, the Revised Minimum Number of Shares (it being understood that
Purchaser shall not in any event be required to accept for payment, or pay
for, any Shares if less than the Revised Minimum Number of Shares are tendered
pursuant to the Offer and not withdrawn at the Expiration Date).
The Merger. Following completion of the Offer, Purchaser will own either (i)
more than 90% of the Shares or (ii) 49.9% of the Shares. Purchaser then will
be merged with and into the Company, either pursuant to a short-form merger
under the provisions of the CGCL or a vote of the Company's shareholders at a
meeting. See "Shareholders Meeting" below. At the Effective Time, the separate
corporate existence of Purchaser will cease and the Company will continue as
the Surviving Corporation and will become a wholly owned subsidiary of Parent.
In the Merger: (i) each share of common stock, $1.00 par value, of Purchaser
issued and outstanding will
18
be converted into and become one fully paid and nonassessable share of common
stock of the Surviving Corporation; and (ii) each Share issued and outstanding
(other than (a) Shares held by any subsidiary of the Company, (b) each share
owned by Parent or Purchaser (including Shares purchased by Purchaser in the
Offer), and (c) Shares held by shareholders who have demanded and perfected,
and have not withdrawn or otherwise lost, dissenters' rights, if any, under
the CGCL) will be cancelled and converted automatically into the right to
receive, upon surrender of the certificate formerly representing such Share,
an amount in cash, without interest, equal to $5.50 or any higher price that
may be paid per Share in the Offer (the "Merger Consideration"). Shares as to
which dissenters' rights have been validly exercised pursuant to the CGCL will
not be converted into the right to receive the Merger Consideration, but will
be entitled to payment of the fair market value of such Shares in accordance
with the provisions of Chapter 13 of the CGCL.
Board Representation. Following completion of the Offer, Purchaser will have
the right to appoint new directors of the Company. The Merger Agreement
provides that upon the purchase by Purchaser of such number of Shares
satisfying the Minimum Condition or the Revised Minimum Number of Shares
pursuant to the Offer, Purchaser will be entitled, at its option, to designate
such number of directors, rounded up to the next whole number, on the Board as
will give Purchaser representation on the Board equal to the product of (i)
the total number of directors on the Board (giving effect to any increase or
decrease in the number of directors pursuant to the Merger Agreement), and
(ii) the percentage that the aggregate number of Shares beneficially owned by
Purchaser (including Shares accepted for payment) and Parent bears to the
total number of Shares issued and outstanding. The Company will, at such time,
use its best efforts to cause Purchaser's designees to be appointed or elected
to the Board, and to constitute the same percentage as such individuals
represent on the Board of (a) each committee of the Board (other than any
committee of the Board established to take action under the Merger Agreement),
(b) each board of directors of each Subsidiary, and (c) each committee of each
such board. Notwithstanding the foregoing, until the Effective Time, such
Board will include at least two directors who are directors on the date of the
Merger Agreement and who are not employees of the Company or any of its
Subsidiaries or affiliates of Parent or Purchaser.
Parent or Purchaser will supply to the Company any information with respect
to itself and such nominees, officers, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Upon
any request by ▇▇▇▇▇▇▇▇▇, the Company will file with the Commission and
transmit to the record shareholders of the Company such information with
respect to the Company and its officers and directors and Purchaser's
designees as is necessary to enable Purchaser's designees to be elected to the
Board.
From and after the Effective Time, the directors and officers of Purchaser
at the Effective Time will become the directors and officers of the Surviving
Corporation.
Charter Documents. The Merger Agreement provides that, at the Effective
Time, the Certificate of Incorporation of Purchaser, as in effect at the
Effective Time, will be the Articles of Incorporation of the Surviving
Corporation until thereafter amended in accordance with its provisions and as
provided by the CGCL. The Merger Agreement also provides that the Bylaws of
Purchaser, as in effect at the Effective Time, will be the Bylaws of the
Surviving Corporation until thereafter amended in accordance with its
provisions, the provisions of the Articles of Incorporation and as provided by
the CGCL.
Shareholders Meeting. If Purchaser does not hold at least 90% of the Shares
following completion of the Offer, under the CGCL, the Merger cannot be
effected without a vote of the Company's shareholders. The Company will as
promptly as practicable following the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer, duly call, give notice of, convene
and hold a meeting of its shareholders (the "Special Meeting") for the purpose
of approving the Merger and adopting the provisions relating to the Merger in
the Merger Agreement. The Company will use its best efforts to solicit from
its shareholders proxies in favor of the approval of the Merger, and will take
all other action necessary or advisable to secure the vote or consent of its
shareholders required by the CGCL, its Articles of Incorporation and Bylaws,
and to obtain such approvals, subject to applicable fiduciary duties of the
Board.
19
Under the CGCL, if Purchaser or Parent acquire at least 90% of the Shares,
Purchaser will be able to approve the Merger without a vote of the Company's
shareholders. In the event Purchaser or Parent acquires at least 90% of the
Shares, and provided that the other conditions set forth in the Merger
Agreement have been satisfied or waived, Purchaser, Parent and, at the request
of Parent, the Company will take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after expiration or
termination of the Offer without a meeting of the Company's shareholders in
accordance with the CGCL.
Proxy Statement. If approval of the Merger and adoption of the Merger
Agreement by the Company's shareholders is required by applicable law, the
Company will prepare and file a proxy statement (the "Proxy Statement") with
the Commission and the Company and Parent will cooperate in responding to any
comments of the Staff of the Commission and the Company will cause the Proxy
Statement to be mailed to its shareholders after responding to all such
comments to the satisfaction of the staff of the Commission. The Proxy
Statement will, subject to the Board's fiduciary duties, include a
recommendation of the Board to vote in favor of the approval of the Merger and
the adoption of the provisions relating to the Merger in the Merger Agreement.
Employee Benefits. Parent has agreed that for a period of twelve months from
the Effective Time, it will cause the Surviving Corporation to provide active
employees of the Company and its Subsidiaries with benefits (including,
without limitation, welfare benefits) that are reasonably comparable to the
benefits provided under the Company's benefit plans (other than equity-based
plans) as in effect immediately prior to the Effective Time. Additionally,
Parent will cause the Surviving Corporation to provide a two-month paid
sabbatical to certain employees as identified by the Company. Parent will
provide such sabbatical if the Surviving Corporation is merged with, or
transfers all of its assets to, Parent or an affiliate of Parent.
Existing Stock Options. The options granted pursuant to the Company's 1994
Directors Stock Option Plan will vest automatically prior to the Effective
Time and, if not exercised by the Effective Time, will terminate. Prior to the
Effective Time, the Company, certain employees identified by the Company in
the Merger Agreement and all officers of the Company (each, a "Holder") will
enter into a written agreement in form reasonably satisfactory to Parent and
the Company pursuant to which each Holder will agree to terminate and cancel
all outstanding options issued pursuant to the Company's 1993 Employee Stock
Option Plan (the "Existing Option Plan") as of the closing of the Merger. In
consideration for such surrender and cancellation of options, on the date
which is twelve months after the Effective Time (the "Payment Date"), each
Holder employed by the Company on the Payment Date, or who was terminated
without cause prior to such Payment Date, will receive a cash bonus equal to
the product of (i) the number of vested options (using monthly vesting) to
purchase the Company's common stock held by such Holder pursuant to the
Existing Option Plans as of the Effective Time, and (ii) the difference
between $10.00 per share and the exercise price per share of such options;
provided, however, that the aggregate amount the Company or the Surviving
Corporation agrees to pay as of the Effective Time will not exceed $2,040,000.
If the aggregate amount payable by the Company or the Surviving Corporation
exceeds $2,040,000, any such cash bonus payable to a Holder will be reduced
pro rata to the extent of any such excess. Any consideration payable hereunder
will be subject to all tax withholdings as required by applicable law, and
deducted from the amount of the consideration payable to Holder. The Board
will take all other actions it deems appropriate to cause all outstanding
options to be terminated and canceled as of or prior to the Effective Time.
Conduct of Business. Pursuant to the Merger Agreement, the Company has
covenanted and agreed that, prior to the Effective Time, unless Parent
otherwise consents in writing or as otherwise expressly contemplated by the
Merger Agreement, the business of the Company will be conducted only in the
ordinary course. Subject to the foregoing limitations, the Company has also
covenanted and agreed that:
Governing Documents; Stock Splits; Redemptions; Issuances of Securities.
The Company will not, directly or indirectly: (i) amend or propose to amend
its Articles of Incorporation or Bylaws or reincorporate in any
jurisdiction; (ii) split, combine or reclassify any issued and outstanding
shares of its capital stock, or declare, set aside or pay any dividend or
other distribution (payable in cash, stock, property or otherwise) with
respect to such shares; (iii) redeem, purchase, acquire or offer to acquire
(or permit any Subsidiary to
20
redeem, purchase, acquire or offer to acquire) any shares of its capital
stock; or (iv) issue, sell, pledge, accelerate, modify the terms of or
dispose of, or agree to issue, sell, pledge, accelerate, modify the terms
of or dispose of, any additional shares of, or securities convertible or
exchangeable for, or any options, warrants, calls, commitments or rights of
any kind to acquire any shares of, its capital stock of any class or other
property or assets, provided, that the Company (a) may issue Shares upon
the exercise of options outstanding as of the date of the Merger Agreement,
(b) may grant options under its 1993 Employee Stock Option Plan to any new
employee in amounts consistent with past practices, and (c) may enter into
certain agreements or arrangements contemplated by the Merger Agreement.
Dispositions; Acquisitions; Discharge of Liabilities; Settlement of
Litigation. The Company will not (i) transfer, lease, license, sell,
mortgage, pledge, dispose of or encumber any material assets, except in the
ordinary course of business consistent with past practice, (ii) acquire (by
merger, consolidation or acquisition of stock or assets) any corporation,
partnership or other business organization or division thereof or any
material assets, (iii) enter into or modify any material contract, lease,
agreement or commitment, except in the ordinary course of business
consistent with past practice, (iv) terminate, modify, assign, waive,
release or relinquish any material rights or claims or amend any material
rights or claims not in the ordinary course of business consistent with
past practice, (v) pay, discharge or satisfy any material claims,
liabilities or obligations, other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business, reflected or reserved against in, or
contemplated by, the consolidated financial statements of the Company
included in reports and registration statements filed with the Commission
(the "SEC Reports"), or (vi) settle or compromise any material claim,
action, suit or proceeding pending or threatened against it, or, if the
Company may be liable or obligated to provide indemnification, against its
directors or officers, before any court, governmental agency or arbitrator.
Indebtedness. Except as provided in the Merger Agreement, the Company
will not (i) incur or adversely modify any material indebtedness or other
liability; provided, however, that the Company will be permitted to draw
upon its existing credit lines as it may deem appropriate, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (directly or
indirectly, contingent or otherwise) for the obligations of any other
person, or (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly owned Subsidiaries
or customary loans or advances to employees in the ordinary course of
business consistent with past practice).
Employee Compensation. The Company will not grant any increase in the
salary or other compensation of its employees, or grant any bonus to any
employee or enter into any employment agreement or make any loan to or
enter into any material transaction of any other nature with any employee
of the Company or any Subsidiary, except in the ordinary course of business
consistent with past practices, or as contemplated by the Merger Agreement.
Company Options. The Company will not, except as contemplated by the
Merger Agreement or as may be required by applicable law or regulation or,
in the case of employees who are not executive officers of the Company, in
the ordinary course of business consistent with past practices (i) adopt,
increase, accelerate the vesting of or payment of any amounts in respect
of, or otherwise amend, in any respect, any collective bargaining, bonus,
profit sharing, incentive or other compensation, stock option, stock
purchase or restricted stock, insurance, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust,
fund, plan or arrangement for the benefit or welfare of any directors,
officers or employees, or (ii) enter into any employment or severance
agreement with, or grant any severance or termination pay, to any officer
or director of the Company.
Accounting Methods. The Company will not change any of its accounting
methods without providing advance notice to Parent in writing.
Tax Elections. The Company will not make any tax election (other than in
the ordinary course of preparing and filing its tax returns) or settle or
compromise any tax liability or investigation.
21
Company Relationships with Suppliers and Customers; Participation in
Meetings. The Company will use its reasonable efforts, to the extent not
prohibited by the Merger Agreement, to maintain its relationships with its
suppliers, customers and employees, and, if and as requested by Parent or
Purchaser, (i) to the extent permitted by applicable law, the Company will
use its reasonable best efforts to make reasonable arrangements for
representatives of Parent or Purchaser to meet with customers and suppliers
of the Company or any Subsidiary, and (ii) the Company will schedule, and
the management of the Company will participate to the extent requested in,
meetings of representatives of Parent or Purchaser with employees of the
Company or any Subsidiary.
Access to Information. Subject to the requirements of any binding
confidentiality agreements with customers and subject to any applicable
limitations imposed by law, the Company will, prior to the Effective Time,
afford Parent reasonable access during regular business hours to its officers,
employees, agents, properties, books, records and work papers, and will
furnish Parent all financial, operating and other information and data as
Parent may reasonably request, provided, that in the event such access or the
furnishing of such information is prohibited or limited due to binding
customer agreements or applicable law, the Company will inform Parent and use
its reasonable best efforts to obtain any necessary consent to allow such
access or to provide such information. Additionally, Parent, Purchaser and the
Company agree that the confidentiality provisions agreed to in the Mutual Non-
Disclosure Agreement, dated as of August 6, 1998, as amended (the "Mutual Non-
Disclosure Agreement"), will remain binding and in full force and effect in
accordance with the terms of such agreement.
Consents and Approvals. Each of the Company, Parent and Purchaser will take
all reasonable actions necessary to comply with all legal requirements which
may be imposed on it with respect to the Merger Agreement, the Stock Option
Agreement, the Common Stock Option and the Transactions and will cooperate
with and furnish information to each other in connection with any such
requirements imposed on any of them or their respective subsidiaries. Subject
to the terms and conditions of the Merger Agreement, the Company, Parent and
Purchaser will use all commercially 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 to consummate and make effective as promptly as practicable the
Transactions, including, without limitation, using all commercially reasonable
efforts to obtain all necessary waivers, consents and approvals. Nothing in
the Merger Agreement will require Parent or Purchaser to agree to make, or to
permit the Company to make, any divestiture of or grant any rights to a
significant asset in order to obtain any waiver, consent or approval.
Shareholder Litigation. The Company will give Parent the opportunity to
participate in the defense and settlement of any shareholder litigation
against the Company or its directors or officers relating to any of the
Transactions and will not enter into any such settlement without Parent's
consent, which consent may not be unreasonably withheld.
Non-Solicitation. Neither the Company nor its officers, directors or
representatives, or any of their respective affiliates will initiate, solicit
or encourage, directly or indirectly, or take any action to facilitate
inquiries or the making of any proposal with respect to or participation in
negotiations concerning any proposal with respect to or participation in
negotiations concerning any merger, consolidation, acquisition of more than
two percent of the capital stock of the Company, a business combination
involving the Company or the purchase of all or a significant portion of the
assets of the Company (an "Alternative Transaction"), except that the Board
may provide information to any third person making a bona fide, written and
unsolicited inquiry concerning an Alternative Transaction that would result in
the payment to the Company shareholders of a higher price per share in cash
than the Offer Price (a "Superior Proposal"), provided that counsel to the
Company has advised the Board in writing that its fiduciary duties require it
to consider the Superior Proposal.
The Merger Agreement provides that the Company will immediately notify
Parent if any proposal, offer, inquiry or other contact is received by, any
information is requested from, or any discussions or negotiations are sought
to be initiated or continued with, the Company by or from any person,
corporation, entity or "group" (as defined in Section 13(d) of the Exchange
Act) other than Parent and its affiliates, representatives and agents (each, a
"Third Party") in connection with any Alternative Transaction, and will, in
any such notice to Parent,
22
indicate the identity of the Third Party and the terms and conditions of any
proposals or offers or the nature of any inquiries or contacts, and thereafter
will keep Parent informed, on a current basis, of the status and terms of any
such proposals or offers and the status of any such discussions or
negotiations. The Company will provide Parent with not less than two Business
Days' (defined as a weekday other than a public holiday in the U.S. or
Germany) notice prior to executing any definitive agreement with respect to
any Alternative Transaction or any public announcement relating to any
Alternative Transaction. Prior to furnishing any non-public information to, or
entering into negotiations with, any Third Party, the Company will obtain an
executed confidentiality agreement from such Third Party on terms
substantially the same as, or no less favorable to the Company in any material
respect than, those contained in the Mutual Non-Disclosure Agreement. The
Company will not release any Third Party from, or waive any provision of, any
such confidentiality agreement or any other confidentiality or standstill
agreement to which the Company is a party.
Loan from Parent to Company. Subject to the limitations set forth in the
Merger Agreement, in the event that the Merger is not consummated on or before
March 5, 1999, Parent will make available a loan to the Company in the
aggregate principal amount of $3,000,000 (the "Loan"). Interest on the
principal amount will accrue at a floating rate per annum equal to the
internal rate of interest assessed by Parent or its affiliates on
intercorporate loans made to or among subsidiaries of Parent. The principal
amount and accrued interest thereon will be due and payable two years from the
date the Loan is made. See Section 11.
Option to Purchase Shares. Concurrent with the execution of the Merger
Agreement, the Company granted to Parent the Common Stock Option to purchase
an aggregate of 600,000 Shares at an exercise price of $2.00 per Share.
Options to purchase 100,000 Shares will become immediately exercisable if and
when the Loan is made by Parent to the Company. The Common Stock Option will
become exercisable as to the remaining 500,000 Shares if and when a default
occurs under the Loan. The Common Stock Option will expire (i) on March 5,
1999, if the Loan is not made, or (ii) on the first anniversary of the
scheduled maturity date of the Loan. See Section 11.
Indemnification. The Merger Agreement provides that, subject to certain
limitations set forth therein, and subject to applicable law, for a period of
not less than four years from and after the Effective Time, the Surviving
Corporation (or any successor) will indemnify, defend and hold harmless the
present and former directors, officers, employees and agents of the Company
and its Subsidiaries against all losses, claims, damages, liabilities, fees,
costs and expenses (including reasonable fees and disbursements of counsel
approved by the Surviving Corporation in advance of disposition of judgments,
fines, losses, claims, liabilities and amounts paid in settlement (provided
that any such settlement is effected with the written consent of Parent or the
Surviving Corporation)) based in whole or in part on the fact that such person
is or was such a director, officer, employee or agent and arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent provided under the Company's Articles of Incorporation, Bylaws and
indemnification agreements as in effect on the date of the Merger Agreement
(including provisions relating to the advancement of expenses incurred in the
defense of any action or suit).
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to its corporate organization and
qualification, its Subsidiaries, charter documents, capitalization, authority,
conflicts, consents, filings with the Commission and other governmental
authorities, compliance with applicable laws, required permits, SEC Reports,
financial statements, the absence of certain changes or events concerning its
business, absence of undisclosed liabilities, absence of litigation, employee
benefit matters, employment agreements, labor matters, truth of information
supplied by the Company, title to real property, taxes, environmental matters,
brokers involved in the Transactions, the receipt of the Fairness Opinion from
SoundView, intellectual property, transactions with certain interested
persons, insurance, and the required vote of its shareholders to approve the
Merger Agreement and the Merger.
Parent and ▇▇▇▇▇▇▇▇▇ also have made certain representations and warranties
with respect to corporate organization and qualification, authority relative
to the Merger Agreement and the Transactions, non-contravention, governmental
approvals, brokers, financing, and information supplied to the Company.
23
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the following
conditions: (i) if required by the CGCL, the Merger and the provisions
relating to the Merger in the Merger Agreement will have been approved and
adopted by the requisite vote of the shareholders of the Company; and (ii) no
foreign or domestic, federal, state or local, statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
permit, judgment, decree or other requirement of any governmental entity will
prohibit consummation of the Merger.
The Merger Agreement provides that the obligation of Parent and Purchaser to
effect the Merger is subject to the following conditions: (i)(a) any waiting
period under the HSR Act applicable to the purchase of Shares pursuant to the
Merger shall have expired or been terminated; (b) all requirements of any
applicable foreign competition and antitrust statutes and regulations to the
consummation of the Merger shall have been satisfied, including approval by
the German Federal Cartel Office (the "FCO") pursuant to the German Law
Against Restraints of Competition (the "AARC"); (ii) no preliminary or
permanent injunction or other order, decree or ruling issued by any court of
competent jurisdiction nor any statute, rule, regulation or order entered,
promulgated or enacted by any governmental, regulatory or administrative
agency or authority is in effect that would restrain the effective operation
of the business of the Company and its Subsidiaries from and after the
Effective Time, and no proceeding challenging the Merger Agreement, the Common
Stock Option, the Stock Option Agreement or the Transactions or seeking to
prohibit, alter, prevent or materially delay the Merger will be pending before
as Governmental Authority; (iii) the Company will not have breached or failed
to perform in any material respect any of it covenants or agreements under the
Merger Agreement; (iv) Purchaser will have paid for the Shares pursuant to the
Offer; (v) Purchaser and Parent will have received an opinion from counsel to
the Company in a form reasonably satisfactory to Parent; and (vi) all
consents, waivers or notices required to be obtained or made by the Company,
for the authorization, execution, delivery and performance of the Merger
Agreement and the consummation of the Transactions, will be obtained and made
by the Company.
Termination and Abandonment. The Merger Agreement, the Common Stock Option,
the Stock Option Agreement and the Voting Agreements may be terminated and the
Merger abandoned at any time prior to the Effective Time: (i) by mutual
written consent of Parent and the Company; (ii) by either Parent or the
Company, if (a) any Governmental Authority will have issued an order, decree
or ruling or taken any other action, in each case permanently restraining,
enjoining or otherwise prohibiting all or any material part of the
Transactions and such order, decree, ruling or other action will have become
final and non-appealable, or (b) the Merger will not have been completed by
June 30, 1999; (iii) by Parent, if (a) the Offer is terminated or expires
without the purchase of any Shares, unless such termination or expiration has
been caused by the failure of Parent or Purchaser to perform in any material
respect its obligations under the Merger Agreement, (b) due to an occurrence
that, if occurring after the commencement of the Offer, could reasonably be
expected to result in a failure to satisfy any of the conditions set forth in
Section 14, (c) Parent and Purchaser will have failed to commence the Offer on
or prior to the fifth business day following the date of the initial public
announcement of the Offer, (d) the Board will have resolved to enter into a
letter of intent, agreement in principle or similar agreement, including any
definitive written agreement, with respect to an Alternative Transaction with
a Third Party, (e) a Third Party has commenced a tender offer, proxy
solicitation or exchange offer for any shares of capital stock of the Company,
(f) the Board will have withdrawn, or modified or amended in a manner adverse
to Parent or Purchaser, its approval or recommendation of the Offer and the
Merger, or approved, recommended or endorsed any proposal for an Alternative
Transaction, (g) SoundView will have withdrawn its Fairness Opinion, or (h)
the required approval of the shareholders of the Company will not have been
obtained by reason of a failure to obtain the required vote at a duly held
meeting of shareholders or at any adjournment thereof; (iv) by either Parent
or Purchaser, on the one hand, or the Company, on the other hand, if the other
party will have failed to comply in any material respect with any covenant or
obligation contained in the Merger Agreement to be complied with or performed
by such Party at or prior to such date of termination; (v) by the Company, if,
prior to acceptance for payment of Shares by Purchaser under the Offer, the
Company will have done each of the following: (a) entered into a definitive
written agreement with respect to an Alternative Transaction with a Third
Party; (b) determined, after receipt of written advice from legal counsel to
the Board, that the failure to take such action as described in the preceding
clause (v)(a) would cause the Board to violate its fiduciary duties
24
to the Company's shareholders under applicable law; and (c) given notice to
Parent and Purchaser of its intent to terminate the Merger Agreement and of
the terms and conditions of the Alternative Transaction, such notice to be
given at least five Business Days prior to the date of termination of the
Merger Agreement.
In the event of the termination of the Merger Agreement, the Common Stock
Option, the Stock Option Agreement or the Voting Agreements and the
abandonment of the Merger all strictly pursuant to the preceding paragraph,
such agreements will thereafter become void and have no effect, and no party
will have any liability to any other party or its shareholders or directors or
officers in respect thereof, except that nothing in the Merger Agreement will
relieve any party from liability for any willful breach of the Merger
Agreement. If Parent terminates the Merger Agreement, the Stock Option
Agreement or the Voting Agreements pursuant to the previous paragraph, or if
the Company terminates the Merger Agreement pursuant to the previous
paragraph, then the Company will pay to Parent, on the second business day
following any such termination, an amount equal to $1,023,000.
Costs and Expenses. All costs and expenses incurred in connection with the
Merger Agreement and the Transactions will be paid by the party incurring such
costs and expenses, except that Parent and the Company will each pay one half
of the costs incurred in printing and distributing the Proxy Statement, if
any.
25
THE STOCK OPTION AGREEMENT
The following summary of the Stock Option Agreement is qualified in its
entirety by reference to the Stock Option Agreement, a copy of which is filed
as Exhibit (c)(2) to the Schedule 14D-1 and is incorporated by reference in
this Offer to Purchase. The Company has granted Purchaser the right to
purchase the Option Shares so that in the event at least 80%, but less than
90%, of the Shares are tendered to Purchaser in the Offer, Purchaser will be
able to buy additional shares so that following such purchase Purchaser will
hold 90% of the Shares then outstanding. Purchaser then will be able to effect
the Merger without the Special Meeting.
Grant of Stock Option. Pursuant to the Stock Option Agreement, the Company
granted to Purchaser the Stock Option to purchase the Option Shares at $5.50
per Share, subject to the terms and conditions set forth in the Stock Option
Agreement; provided, however, that the Stock Option will not be exercisable if
(i) less than 80% of the Shares then outstanding has been tendered upon the
Expiration Date, and (ii) the number of Shares subject thereto exceeds the
number of authorized Shares available for issuance.
Exercise of Stock Option. The Stock Option Agreement provides that, subject
to the conditions set forth in the Stock Option Agreement and to any
additional requirements of law, the Stock Option may be exercised by
Purchaser, in whole but not in part, at any time or from time to time after
the occurrence of an Exercise Event (as defined below) and prior to the
Termination Date (as defined below). For the purpose of the Stock Option
Agreement, an "Exercise Event" would occur if at least 80% of the Shares then
outstanding have been tendered upon the Expiration Date, and the "Termination
Date" would occur upon the first to occur of any of the following: (i) the
Effective Time; (ii) the date which is 10 business days after the occurrence
of an Exercise Event (unless prior thereto the Stock Option has been
exercised); or (iii) the termination of the Merger Agreement.
Conditions to Closing. The Stock Option Agreement provides that the
obligation of the Company to deliver Option Shares upon any exercise of the
Stock Option is subject to the following conditions: (i) such delivery would
not in any material respect violate, or otherwise cause the material violation
of, Rule 4460(i)(1) of the National Association of Securities Dealers Manual
("Rule 4460") or any material applicable law, including, without limitation,
the HSR Act, applicable thereto; (ii) no preliminary or permanent injunction
or other final, nonappealable judgment by a court of competent jurisdiction
preventing or prohibiting such exercise of such Stock Option or the delivery
of the Option Shares; and (iii) the Company has available from its authorized
Shares such number of Shares as is sufficient to issue the Option Shares;
provided, however, that the Company will have fully complied with its
obligations under Rule 4460.
Representations and Warranties. The Stock Option Agreement contains various
representations and warranties of the parties thereto, including
representations by the Company as to the Company's corporate organization and
authority relative to the Stock Option Agreement, the Company's authority to
issue the Option Shares and the absence of any conflicts and the obtaining of
all applicable filings and consents.
Termination. The Stock Option Agreement, other than certain obligations of
the parties specified in the Stock Option Agreement, will terminate on the
Termination Date.
THE VOTING AGREEMENTS
The following summary of the Voting Agreements (as defined below) is
qualified in its entirety by reference to the Voting Agreements, the text of
each of which is filed as Exhibit (c)(3) to the Schedule 14D-1 and is
incorporated by reference in this Offer to Purchase.
Agreement to Tender Shares and Grant of Irrevocable Proxy.
Voting Agreements with Specified Shareholders. Concurrently with or prior to
the execution of the Merger Agreement, Dr. ▇▇▇, Chairman of the Board and
Chief Executive Officer of the Company, ▇▇▇▇▇ ▇▇▇, Dr. ▇▇▇'s spouse and Vice
President of Administration, Director of Corporate Communications and
Secretary of the
26
Company, Nippon Typewriter Company Ltd., Clal Electronics and Canon Sales Co.,
Inc. (collectively, the "Specified Shareholders"), which collectively then
held approximately 2,293,071 Shares or 37% of the Shares outstanding as of
January 15, 1999, each entered into a voting agreement (the "Specified Voting
Agreements") with Parent pursuant to which each such shareholder has agreed to
tender pursuant to the Offer the Shares held by such shareholder, and granted
an irrevocable proxy to Parent to vote at any meeting of the shareholders of
the Company all Shares owned by such shareholder (i) in favor of the Merger,
and (ii) against any action or agreement which would impede, interfere with or
prevent the Merger, including any other extraordinary corporate transaction,
such as a merger, reorganization or liquidation involving the Company and a
third party or any other proposal of a third party to acquire the Company.
Transfer of Shares. Pursuant to the Specified Voting Agreements, the
Specified Shareholders agreed not to (i) transfer, or consent to any transfer
of, any or all of the Shares or any interest therein held by them, (ii) enter
into any contract, option or other agreement or understanding with respect to
any transfer of any or all of the Shares or any interest therein held by them,
(iii) grant any proxy, power-of-attorney or other authorization or consent in
or with respect to the Shares held by them, or (iv) take any other action that
would in any way restrict, limit or interfere with the performance of their
obligations under the Specified Voting Agreements. Additionally, in the event
of any stock split, stock dividend, merger, reorganization, recapitalization
or other change in the capital structure of the Company affecting the
outstanding Shares, or the acquisition of additional Shares or other
securities or rights of the Company by any Specified Shareholder, the number
of Shares subject to the Specified Voting Agreements will be adjusted
appropriately, and the Specified Voting Agreements and the obligations
thereunder will attach to any additional Shares or other securities or rights
of the Company issued to or acquired by the Specified Shareholders.
Representations and Warranties. The Specified Voting Agreements contain
various representations and warranties of the parties thereto, including
representations by each Specified Shareholder as to each Specified
Shareholder's record and beneficial ownership of the Shares held by such
shareholder, due corporate organization and authority (to the extent the
Specified Shareholder is a corporate entity) to enter into the Specified
Voting Agreements, due authorization to enter into and the enforceability of
the Specified Voting Agreements, and the absence of conflicts and encumbrances
on the Shares held by them.
Covenants. The Specified Voting Agreements provide that (i) from and after
the date of the Specified Voting Agreements to the Effective Time, each
Specified Shareholder will not, and will not permit the Company to, make any
elections, or change any existing elections, with respect to taxes, without
the prior written consent of Parent, and (ii) from and after the date that
Purchaser will have purchased and paid for all of the Shares of such Specified
Shareholder, such Specified Shareholder will make available to Parent any and
all records and other materials in such Specified Shareholder's possession or
control that relate to any of the Company's filings or returns relating to
taxes affecting the Company, or any other records relating to taxes of the
Company or for which the Company may be responsible.
Termination. The Specified Voting Agreements, and all rights and obligations
of the parties thereunder, will terminate immediately upon the earlier of (i)
the date upon which the Merger Agreement is terminated in accordance with its
terms, or (ii) the date that Purchaser will have purchased and paid for all of
the Shares of such Specified Shareholder; provided, however, that the
covenants set forth in the Specified Voting Agreements will survive without
limitation. Additionally, the irrevocable proxy given pursuant to each
Specified Voting Agreement will be automatically revoked and be of no further
force or effect, without further action on the part of any party hereto,
immediately upon the termination of such Specified Voting Agreement.
Voting Agreement with Poalim.
Immediately prior to the execution of the Merger Agreement, Poalim
Investments Ltd. ("Poalim"), which then held approximately 559,228 Shares,
delivered a letter to Parent (together with the Specified Voting Agreements,
the "Voting Agreements") pursuant to which ▇▇▇▇▇▇ agreed to tender 520,000 of
its Shares in the Offer or 8% of the Shares outstanding as of January 15,
1999. Additionally, ▇▇▇▇▇▇ has represented to Parent the number of Shares
Poalim beneficially owns and holds of record and has agreed that it will not,
at any time prior
27
to June 30, 1999, transfer or consent to transfer any of such Shares to any
person, enter into any contract, option or agreement with respect to such
Shares it owns or take any action that would in any way restrict, limit or
interfere with the tendering of such Shares into the Offer. Poalim also has
granted its proxy (which is irrevocable prior to June 30, 1999) to Dr. ▇▇▇ to
vote 520,000 of Poalim's Shares in favor of the Merger and against any action
or agreement which would impede, interfere with or prevent the Merger.
11. Purpose of the Offer; Plans for the Company after the Offer and the
Merger.
Purpose of the Offer. The purpose of the Offer and the Merger is for Parent
to acquire control of, and the entire equity interest in, 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.
Plans for Merger Consummation. Under the CGCL, the approval of the Board and
the affirmative vote of the holders of a majority of the outstanding Shares is
required to approve the Merger Agreement. The Board has unanimously approved
the Merger Agreement, and, unless the Merger is consummated pursuant to the
short-form merger provisions under the CGCL described below, the only
remaining required corporate action of the Company is the approval of the
Merger Agreement by the affirmative vote of the holders of a majority of the
Shares. Accordingly, if the Minimum Condition is satisfied, Purchaser will
have sufficient voting power to cause the approval of the Merger and adoption
of the Merger Agreement without the affirmative vote of any other shareholder
of the Company. Certain shareholders of the Company, holding in the aggregate
approximately 45% of the Shares as of January 15, 1999, have each entered into
a voting agreement with Parent pursuant to which each has agreed to tender
their Shares pursuant to the Offer, and to vote, and has granted irrevocable
proxies to Parent or Dr. ▇▇▇ (in the case of one such shareholder) to vote,
all Shares owned by such shareholder in favor of the Merger.
In the Merger Agreement, the Company has agreed to take all action necessary
to convene a meeting of its shareholders as soon as practicable after the
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby, if such action
is required by the CGCL. Parent and Purchaser have agreed that all Shares
owned by them and their subsidiaries will be voted in favor of the Merger
Agreement and the transactions contemplated thereby.
If Purchaser accepts for payment such number of Shares as shall satisfy the
Minimum Condition or the Revised Minimum Number, Purchaser will be entitled to
designate representatives to serve on the Board in proportion to Purchaser's
ownership of Shares following such purchase. See Section 10. In the event the
Minimum Condition is satisfied, Purchaser expects that such representation
would permit Purchaser to exert substantial influence over the Company's
conduct of its business operations.
Under the CGCL, if Purchaser acquires, pursuant to the Offer, the Stock
Option or otherwise, at least 90% of the Shares then outstanding, Purchaser
will be able to effect the Merger without a vote of the Company's
shareholders. In such event, Parent, Purchaser and the Company have agreed in
the Merger Agreement to 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 pursuant to the short-form
merger provisions under the CGCL.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding are acquired by Purchaser pursuant to the Offer and the Stock
Option, Purchaser will waive the Minimum Condition and amend the Offer to
reduce the number of Shares subject to the Offer to the Revised Minimum Number
of Shares and, if a greater number of Shares are tendered into the Offer and
not withdrawn, purchase, on a pro rata basis, the Revised Minimum Number of
Shares (it being understood that Purchaser shall not in any event be required
to accept for payment, or pay for, any Shares if less than the Revised Minimum
Number of Shares are tendered pursuant to the Offer and not withdrawn at the
expiration of the Offer).
Loan to the Company. Subject to the limitations set forth in the Merger
Agreement, in the event that the Merger is not consummated on or before March
5, 1999, Parent will make the Loan to the Company in the aggregate principal
sum of $3,000,000 (the "Principal"). Interest on the Principal will accrue at
a floating rate
28
per annum equal to the internal rate of interest assessed by Parent or its
affiliates on intercorporate loans made to or among subsidiaries of Parent
(the "Interest"). All Principal and accrued Interest will become due and
payable two years from the date the Loan is made (the "Maturity Date"). Parent
will not, however, be obligated to make the Loan if (i) the Offer has not
expired by its terms or, if the Offer has expired, the Shares tendered in the
Offer are insufficient to satisfy the Minimum Condition or the Revised Minimum
Number, (ii) any shareholder of the Company defaults under the Voting
Agreements, (iii) the Merger Agreement is terminated by Parent because the
Company has failed to comply in any material respect with any covenant or
obligation of the Merger Agreement, (iv) if any representation or warranty
made by the Company under the Merger Agreement, the Common Stock Option or the
Stock Option Agreement is untrue at the time such representation or warranty
was made or is untrue on the date the Loan is made and such breach is caused
by an event that would constitute a Material Adverse Effect under the Merger
Agreement, (v) there is any preliminary or permanent injunction or other
order, decree or ruling issued by any court of competent jurisdiction or any
statute, rule, regulation or order entered, promulgated or enacted by any
governmental, regulatory or administrative agency or authority in effect that
would impact the effective operation of the business of the Company resulting
in a Material Adverse Effect from and after the Effective Time, (vi) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer has not expired or terminated and the satisfaction of any
applicable foreign competition and antitrust statutes and regulations
(including approval by the FCO pursuant to the AARC) has not been obtained,
(vii) there is pending any proceeding or litigation, initiated prior to or
after the date of the Merger Agreement, challenging the Merger or seeking to
prohibit, alter, prevent or materially delay the Merger, (viii) there is
pending or threatened against the Company any claim, action, suit, proceeding
or investigation which would or could reasonably be expected to have a
Material Adverse Effect, or (ix) the Company has terminated the Merger
Agreement prior to acceptance for payment of the Shares by Purchaser under the
Offer, and the Company has done each of the following: (a) entered into a
definitive written agreement with respect to an Alternative Transaction with a
third party; (b) determined, after receipt of written advice from legal
counsel to the Board that the failure to take such action as described in the
preceding clause (a) would cause the Board to violate its fiduciary duties to
the Company's shareholders under applicable law; and (c) given a notice to
Parent and Purchaser of its intent to terminate the Merger Agreement and of
the terms and conditions of the Alternative Transaction, and such notice was
given at least five Business Days prior to the date of termination of the
Merger Agreement.
Company Stock Option
The Company granted to Parent options (the "Options") to purchase an
aggregate of 600,000 Shares at an exercise price of $2.00 per share evidenced
by a Common Stock Option, a form of which is filed as Exhibit (c)(4) to the
Schedule 14D-1 and is incorporated by reference in this Offer to Purchase.
Options to purchase 100,000 Shares will be immediately exercisable if and when
the Loan is made by Parent to the Company. The remaining Options will become
exercisable if and when a default occurs under the Loan. All the Options
expire (i) on March 5, 1999, if the Loan is not made, or (ii) on the first
anniversary of the Maturity Date. The Company will adjust the number of Shares
subject to the Options to maintain the percentage of Shares subject to the
Options at the date of the Merger Agreement if the Company causes or effects
(i) a subdivision or combination on its capital stock, (ii) a stock
distribution or dividend on its capital stock, or (iii) a recapitalization or
reclassification of its capital stock.
AGI Option
Concurrent with the signing of the Merger Agreement, the Company and Parent
agreed to an option (the "AGI Option"). If (a) Parent shall purchase all of
the ordinary and preferred shares of the Israeli Affiliate that are not owned
by the Company, (b) the closing of the Merger does not occur and (c) the
Merger Agreement is terminated (the date on which (a), (b) and (c) will occur,
the "Effective Date of the AGI Option"), Parent will have the right to
purchase, and the Company will be required to sell, all but not less than all
of the ordinary shares (as such number of shares may be increased or decreased
as described below) of the Israeli Affiliate held by the Company (the "AGI
Shares") for the aggregate purchase price of $5,404,770 (the "AGI Purchase
29
Price"), and the Company will have the right to sell to Parent, and Parent
will be required to purchase, all but not less than all of the AGI Shares at
the AGI Purchase Price (in either case, the "Sale"), on the terms and subject
to the conditions set forth therein. If the Israeli Affiliate causes the AGI
Shares to be subdivided or combined into a greater or smaller number of
shares, then the term "AGI Shares" herein shall refer to such subdivided or
combined shares and the AGI Purchase Price shall remain the same.
If either Parent or the Company elects to effect a Sale, written notice must
be sent to a trustee on or prior to the date which is 30 days following the
Effective Date of the AGI Option (the "Expiration Date of the AGI Option").
Additionally, the Company will not sell, pledge or otherwise transfer any of
the AGI Shares to any person other than Parent or one of Parent's affiliates
prior to the Expiration Date of the AGI Option, unless Parent shall have given
its prior written consent.
The AGI Option contains various representations and warranties of the
Company, including representations by the Company as to the due authorization
and valid issuance of the ordinary shares of the Israeli Affiliate, the
absence of liens and encumbrances on the AGI Shares, the Company's authority
to issue the AGI Option, the enforceability of the AGI Option and the absence
of any conflicts with the Company's corporate charter documents, laws or other
agreements.
Dissenters' Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, in connection with the Merger, holders of
Shares, by complying with the provisions of Chapter 13 of the CGCL, may have
certain rights to dissent and to require the Company to purchase their Shares
for cash at fair market value. In general, holders of Shares will be entitled
to exercise "dissenters' rights" under the CGCL only if the holders of five
percent or more of the outstanding Shares properly file demands for payment or
if the Shares held by such holders are subject to any restriction on transfer
imposed by the Company or any law or regulation ("Restricted Shares").
Accordingly, any holder of Restricted Shares and, if the holders of five
percent or more of the Shares properly file demands for payment, all other
such holders who fully comply with all other applicable provisions of Chapter
13 of the CGCL will be entitled to require the Company to purchase their
Shares for cash at their fair market value if the Merger is consummated. In
addition, if immediately prior to the Effective Time, the Shares are not
listed on a national securities exchange or on the list of OTC margin stocks
issued by the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), holders of Shares may likewise exercise their dissenters'
rights as to any or all of their Shares entitled to such rights. If the
statutory procedures under the CGCL relating to dissenters' rights were
complied with, such rights could lead to a judicial determination of the fair
market value of the Shares. The "fair market value" would be determined as of
the day before the first announcement of the terms of the proposed Merger,
excluding any appreciation or depreciation in consequence of the Merger. The
value so determined could be more or less than the Merger Consideration.
Rule 13e-3. 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
Purchaser seeks to acquire the remaining Shares not held by it.
▇▇▇▇▇▇▇▇▇ believes, however, that Rule 13e-3 will not be applicable to the
Merger. Rule 13e-3 would require, 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.
Plans for the Company. It is expected that, initially following the Merger,
the business and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it
deems appropriate under the circumstances then existing. Parent intends to
seek additional information about the Company during this period. Thereafter,
Parent intends to review such information as part
30
of a comprehensive review of the Company's business, operations,
capitalization and management with a view to optimizing the Company's
potential in conjunction with Parent's businesses. It is expected that the
business and operations of the Company will form an important part of Parent's
future business plans.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its Subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its Subsidiaries or any
material change in the Company's capitalization or dividend policy or any
other material changes in the Company's corporate structure or business, or
the composition of the Board or the Company's management.
12. Dividends and Distributions.
The Merger Agreement provides that between the date of the Merger Agreement
and the Effective Time, the Company will not, without the prior written
consent of Parent, (i) split, combine or reclassify any issued and outstanding
shares of its capital stock, or declare, set aside or pay any dividend or
other distribution (payable in cash, stock, property or otherwise) with
respect to such shares, (ii) redeem, purchase, acquire or offer to acquire (or
permit any Subsidiary to redeem, purchase, acquire or offer to acquire) any
shares of its capital stock or (iii) issue, sell, pledge, accelerate, modify
the terms of or dispose of, or agree to issue, sell, pledge, accelerate,
modify the terms of or dispose of, any additional shares of, or securities
convertible or exchangeable for, or any options, warrants, calls, commitments
or rights of any kind to acquire any shares of, its capital stock of any class
or other property or assets, provided, that the Company (a) may issue Shares
upon the exercise of options outstanding on the date of the Merger Agreement,
(b) may grant options under the Company's 1993 Employee Stock Option Plan to
any new employee in amounts consistent with past practices and (c) may enter
into certain agreements or arrangements contemplated by the Merger Agreement.
See Section 10--The Merger Agreement.
13. Effect of the Offer on the Market for the Shares, Exchange Act
Registration and Margin Regulations.
Market for Shares. The purchase of the Shares by Purchaser pursuant to the
Offer will reduce the number of the Shares that might otherwise trade publicly
and will reduce the number of holders of the Shares, which could adversely
affect the liquidity and market value of the remaining Shares held by the
public.
Depending upon the number of the Shares purchased pursuant to the Offer and
the Stock Option, the Shares may no longer meet the requirements of NASDAQ for
continued listing and may be delisted from NASDAQ. Parent intends to seek
delisting of the Shares with NASDAQ following consummation of the Merger.
Stock Quotation. According to published guidelines of NASDAQ, the Shares
would no longer be quoted on NASDAQ if, among other things, the number of
publicly held Shares (excluding the Shares held directly or indirectly by
officers, directors and any person who is a beneficial owner of more than 10%
of the Shares) were less than 200,000, the aggregate market value of publicly
held Shares were less than $1,000,000 or there were fewer than 400 holders of
the Shares or 300 holders in round lots. If these standards were not met,
quotations might continue to be published in the over-the-counter "additional
list" or one of the "local lists" unless, as set forth in published guidelines
of NASDAQ, the number of publicly held Shares was less than 100,000 or there
were fewer than 300 holders in total. According to information furnished to
Purchaser by the Company, as of the close of business on January 15, 1999,
there were 172 holders of record of the Shares not including beneficial
holders of the Shares held in street name, and there were 6,202,993 Shares
outstanding.
If the Shares were to cease to be quoted on NASDAQ, the market for the
Shares could therefor be adversely affected. It is possible that the Shares
would be traded or quoted on other securities exchanges or in the over-the-
counter market, and that price quotations would be reported by such exchanges,
or 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 and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
31
Margin Regulations. The Shares are presently "margin securities," as such
term is defined under the regulations of the Federal Reserve Board, which has
the effect, among other things, of allowing brokers to extend credit on the
collateral of such securities. Depending upon factors similar to those
described above regarding listing and market quotations, following the Offer
it is possible that the Shares might no longer constitute "margin securities"
for the purposes of the Federal Reserve Board's margin regulations in which
event the Shares would be ineligible as collateral for margin loans made by
brokers.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the Commission if the Shares are not listed on a national
securities exchange and if there are fewer than 300 record holders.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company
to its shareholders and to the Commission and would make certain provisions of
the Exchange Act, such as the short-swing profit recovery provisions of
Section 16(b) and the requirement of furnishing a proxy statement in
connection with shareholders' meetings pursuant to Section 14(a) and the
related requirement of furnishing an annual report to shareholders, no longer
applicable with respect to the Shares. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 under the
Securities Act of 1933, as amended, may be impaired or eliminated. If
registration of the Shares under the Exchange Act were terminated, the Shares
would no longer be eligible for quotation on NASDAQ or for continued inclusion
on the Federal Reserve Board's list of "margin securities." Purchaser intends
to seek to cause the Company to apply for termination of registration of the
Shares as soon as possible after consummation of the Merger if the
requirements for termination of registration are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of
the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
14. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of Purchaser's rights to extend and amend the Offer at any
time in its sole discretion, and subject to the provisions of the Merger
Agreement, Purchaser will not be required to accept for payment or pay for any
of the Shares, and may delay the acceptance for payment of or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, the payment for, any of the tendered Shares, and may
terminate or amend the Offer as to any of the Shares not then paid for, if:
(1) at or prior to the expiration date of the Offer, the number of the
Shares validly tendered and not withdrawn, together with any of the Shares
then owned by Parent or Purchaser, shall not satisfy the Minimum Condition
or the Revised Minimum Number; or
(2) at or prior to the expiration date of the Offer, (i) any waiting
period under the HSR Act applicable to the purchase of the Shares pursuant
to the Offer shall not have expired or been terminated or (ii) all
requirements of any applicable foreign competition and antitrust statutes
and regulations to the consummation of the Offer shall not have been
satisfied, including approval by the FCO pursuant to the AARC; or
(3) immediately prior to the expiration date of the Offer, the
Transaction Expenses (as defined in the Merger Agreement) shall be in
excess of $250,000, as calculated by a schedule delivered by the Company to
Purchaser (i) identifying and disclosing any and all actual Transaction
Expenses as of the date of such schedule and (ii) identifying and providing
reasonable estimates of any and all other Transaction Expenses following
the date of such schedule; or
(4) at any time prior to acceptance for payment of or payment for the
Shares, any of the following events or conditions occurs or exists:
(a) any action or proceeding by any Governmental Authority, whether
or not having the force of law is instituted or is pending: (i)
challenging or seeking to make illegal, to delay or otherwise directly
or indirectly to restrain or prohibit the making of the Offer, the
acceptance for payment of or payment
32
for some of or all the Shares by Purchaser, Parent or any affiliate of
Parent or the consummation by Purchaser or Parent of any other
Transaction, or seeking to obtain damages in connection with any
Transaction; (ii) seeking to restrain or prohibit Parent's or
Purchaser's full rights of ownership or operation (or that of Parent's
subsidiaries or affiliates) of any material portion of the business or
assets of the Company, or to compel Parent or any of its subsidiaries
or affiliates to dispose of or hold separate all or any portion of the
business or assets of the Company or of Parent or any of its
subsidiaries; (iii) seeking to impose material limitations on the
ability of Parent or any of its subsidiaries or affiliates effectively
to exercise full rights of ownership of the Shares, including, without
limitation, the right to vote any of the Shares acquired or owned by
Parent or any of its subsidiaries or affiliates on all matters properly
presented to the Company's shareholders; (iv) seeking to require
divestiture by Parent or any of its subsidiaries of any Shares; or (v)
that otherwise, in the judgment of Parent or Purchaser may materially
adversely affect the Company, any of the Subsidiaries, or Parent or any
of its subsidiaries; or
(b) any action is taken or any statute, rule, regulation, judgment,
administrative interpretation, injunction, order or decree is proposed,
enacted, enforced, promulgated, issued or deemed applicable to Parent
or Purchaser or any subsidiary or affiliate of Parent, the Company or
any of its Subsidiaries or the Offer, the acceptance for payment of or
payment for any of the Shares, the Merger or any other Transactions by
any Governmental Authority (other than the application of the routine
waiting period provisions of the HSR Act), that directly or indirectly,
result, or is reasonable likely to, directly or indirectly, result in
any of the consequences referred to in paragraph (a) above; or
(c) any event that has had or could reasonably be expected to have a
Material Adverse Effect; or
(d) (i) any general suspension of trading in securities on the New
York Stock Exchange or NASDAQ, (ii) the declaration of any banking
moratorium or any suspension of payments in respect of banks or any
limitation (whether or not mandatory) which is material to the
Transactions on the extension of credit by lending institutions in the
United States or the Federal Republic of Germany, (iii) a commencement
of a war, armed hostilities or other national or international crisis
directly involving the United States or the Federal Republic of Germany
or otherwise having a significant adverse effect on the functioning of
the financial markets in the United States or the Federal Republic of
Germany, (iv) any significant change in the United States or German
currency exchange rates or suspension of the markets therefor (whether
or not mandatory) or the imposition of, or any significant change in,
any currency or exchange control laws in the United States or the
Federal Republic of Germany which change or suspension is material to
the Transactions, or (v) any limitation by any Governmental Authority
that is likely to materially and adversely affect the financing of the
Offer or the Merger; or
(e) any Third Party enters into a definitive agreement or an
agreement in principle with respect to an Alternative Transaction; or
(f) the Board (i) withdraws, or modifies or changes in a manner
adverse to Parent or Purchaser (including by amendment of the Schedule
14D-9) its approval or recommendation of the Offer, the Merger
Agreement or the Merger, (ii) recommends an Alternative Transaction, or
(iii) upon request of the Parent or Purchaser, fails to reaffirm such
approval or recommendation or resolves to do any of the foregoing; or
(g) the Company breaches or fails to perform in any material respect
any of its covenants or agreements under the Merger Agreement, or any
of its representations and warranties set forth in the Merger
Agreement, the Common Stock Option, or the Stock Option Agreement is
not true in any respect when made or at the Effective Time as if made
at and as of such time (other than representations and warranties which
by their terms address matters only as of a certain date, which are
true as of such date), and in either case the effect thereof is
reasonably expected to have a Material Adverse Effect on the Company;
or
(h) the Merger Agreement is terminated in accordance with its terms
or amended in accordance with its terms to provide for such termination
or amendment of the Offer.
33
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted or waived by Purchaser and Parent, regardless of the
circumstances giving rise to any such condition, in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right and each such right will be deemed an
ongoing right that may be asserted at any time and from time to time.
15. Certain Legal Matters and Regulatory Approvals.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company
(see Section 10), neither Purchaser nor Parent is aware of any license or
other regulatory permit that appears to be material to the business of the
Company and its Subsidiaries, taken as a whole, which might be adversely
affected by the acquisition of the Shares by Purchaser pursuant to the Offer
or, except as set forth below, of any approval or other action by any domestic
(federal or state) or foreign governmental, administrative or regulatory
authority or agency which would be required prior to the acquisition of the
Shares by Purchaser pursuant to the Offer. Should any such approval or other
action be required, it is Purchaser's present intention to seek such approval
or action. Purchaser does not currently intend, however, to delay the purchase
of the Shares tendered pursuant to the Offer pending the outcome of any such
action or the receipt of any such approval (subject to Purchaser's right to
decline to purchase the 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,
Purchaser or Parent or that certain parts of the businesses of the Company,
Purchaser or Parent 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. Purchaser's obligation under the Offer to accept for
payment and pay for the Shares is subject to certain conditions, including
conditions relating to the legal matters discussed in this Section 15. See
Section 14.
State Takeover Laws. The Company's principal executive offices are located
in, and the Company is incorporated under the laws of, the State of
California, which currently has no takeover statute that would apply to the
Offer or to the Merger. However, there can be no assurances that California
will not, prior to the completion of the Offer, adopt such a statute. Under
the CGCL, the Merger may not be accomplished for cash paid to the Company's
shareholders if Purchaser or Parent owns directly or indirectly more than 50%
but less than 90% of the Shares then outstanding unless either all the
shareholders consent or the Commissioner of Corporations of the State of
California approves, after a hearing, the terms and conditions of the Merger
and the fairness thereof. The purpose of the Offer is to obtain 90% or more of
the Shares (on a fully diluted basis) and to enable Parent and Purchaser to
acquire control of the Company.
In the event that more than 50% of the Shares then outstanding are tendered
pursuant to the Offer and not withdrawn, but less than 90% of the Shares then
outstanding are acquired by Purchaser pursuant to the Offer and the Stock
Option Agreement, Purchaser will waive the Minimum Condition and amend the
Offer to reduce the number of Shares subject to the Offer to the Revised
Minimum Number of the Shares and, if a greater number of the Shares is
tendered into the Offer and not withdrawn, purchase, on a pro rata basis, the
Revised Minimum Number of Shares (it being understood that Purchaser shall not
in any event be required to accept for payment, or pay for, any of the Shares
if less than the Revised Minimum Number of Shares are tendered pursuant to the
Offer and not withdrawn at the expiration of the Offer). In the event that
Purchaser acquires the Revised Minimum Number of Shares, it may have, as a
practical matter the ability to ensure approval of the Merger by the Company's
shareholders.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In ▇▇▇▇▇ ▇. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers
of corporations
34
meeting certain requirements more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining shareholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of shareholders in the state and
were incorporated there.
The Company, directly or through Subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, Purchaser will take
such action as then appears desirable, 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
are 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,
Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
Purchaser might be unable to accept for payment any of the Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer,
and the Merger. In such case, Purchaser may not be obligated to accept for
payment any of the Shares tendered. See Section 14.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and
the FTC and certain waiting period requirements have been satisfied. The
acquisition of the Shares by Purchaser pursuant to the Offer and the Stock
Option Agreement are subject to such requirements. See Section 2.
Pursuant to the HSR Act, Parent and the Company each have filed a Premerger
Notification and Report Form in connection with the purchase of the Shares
pursuant to the Offer and the Stock Option Agreement with the Antitrust
Division and the FTC. Under the provisions of the HSR Act applicable to the
Offer, the purchase of the Shares pursuant to the Offer may not be consummated
until the expiration of a 15-calendar day waiting period following the filing
by Parent. The waiting period under the HSR Act applicable to the purchase of
the Shares pursuant to the Offer will expire at 11:59 p.m., New York City
time, on February 4, 1999, unless such waiting period is terminated earlier by
the FTC and the Antitrust Division or extended by a request from the FTC or
the Antitrust Division for additional information or documentary material
prior to the expiration of the waiting period. If Purchaser acquires 50% or
more of the Shares in the Offer, then no separate waiting period would apply
to the subsequent purchase of the Shares pursuant to the Stock Option.
Pursuant to the HSR Act, Parent and the Company have requested 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. If either the FTC or the Antitrust Division were to request additional
information or documentary material from Parent or the Company with respect to
the Offer or the Stock Option Agreement, the waiting period with respect to
the Offer would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance by Parent or the Company
with such request. Thereafter, the FTC or the Antitrust Division must obtain a
court order to prevent Purchaser from consummating the acquisition of the
Shares pursuant to the Offer. If the acquisition of the Shares is delayed
pursuant to a request by the FTC or the Antitrust Division for additional
information or documentary material pursuant to the HSR Act, the Offer may,
but need not, be extended and, in any event, the purchase of and payment for
the Shares will be deferred until 10 days after the request is substantially
complied with, unless the extended period expires on or before the date when
the initial 15-day period would otherwise have expired, or unless the waiting
period is sooner terminated by the FTC and the Antitrust Division. Only one
extension of such waiting period pursuant to a request for additional
information is authorized by the HSR Act and the rules promulgated thereunder,
except by court order. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law.
See Section 4. It is a condition to the Offer that the waiting period
applicable under the HSR Act to the Offer expire or be terminated. See Section
2 and Section 14.
35
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of the
Shares by Purchaser pursuant to the Offer or the Stock Option Agreement. At
any time before or after the purchase of the Shares pursuant to the Offer or
the Stock Option Agreement by Purchaser, 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 purchase of
the Shares pursuant to the Offer or the Stock Option Agreement or seeking the
divestiture of the Shares purchased by Purchaser or the divestiture of
substantial assets of Parent, the Company or their respective subsidiaries.
Private parties and state attorney generals ▇▇▇ also bring legal action under
federal or state antitrust laws under certain circumstances. Based upon an
examination of information available to Parent relating to the businesses in
which Parent, the Company and their respective subsidiaries are engaged,
Parent and Purchaser believe that neither the Offer nor the Stock Option
Agreement will violate the antitrust laws. Nevertheless, there can be no
assurance that a challenge to the Offer or the Stock Option Agreement on
antitrust grounds will not be made or, if such a challenge is made, what the
result would be. See Section 14 for certain conditions to the Offer, including
conditions with respect to litigation.
Foreign Laws. According to publicly available information, the Company also
owns property and conducts business in a number of other countries and
jurisdictions. In connection with the acquisition of the Shares pursuant to
the Offer, the laws of certain foreign countries and jurisdictions may require
the filing of information with, or the obtaining of the approval of,
governmental authorities in such countries and jurisdictions. In addition, the
waiting period prior to consummation of the Offer associated with such filings
or approvals may extend beyond the scheduled Expiration Date.
The governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer or the Merger. There can be no assurance that Purchaser will be able to
cause the Company or its Subsidiaries to satisfy or comply with such laws or
that compliance or noncompliance will not have adverse consequences for the
Company or any Subsidiary after purchase of the Shares pursuant to the Offer
or the Merger.
16. Fees and Expenses.
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of the Shares
pursuant to the Offer.
▇▇▇▇▇▇▇▇▇ and Parent have not appointed any dealer manager to represent it
in connection with the Offer.
Purchaser and Parent have retained Corporate Investor Communications, Inc.
to act as the Information Agent, BankBoston, N.A. to act as the Depositary,
and ▇▇▇▇▇▇ Roja to provide certain financial advisory services in connection
with the Offer. The Information Agent may contact holders of the Shares by
mail, telephone, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominee shareholders to forward materials
relating to the Offer to beneficial owners.
The Information Agent, the Depositary and ▇▇▇▇▇▇ Roja each will receive
reasonable and customary compensation for their services in connection with
the Offer and will also be reimbursed for certain out-of-pocket expenses and
may be indemnified 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 be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
17. Miscellaneous.
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid
state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, Purchaser will make a good
36
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with any such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of the 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 Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY 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.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same
places and in the same manner as set forth in Section 7 (except that they will
not be available at the regional offices of the Commission).
January 22, 1999
37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
STEAG AND PURCHASER
1. Directors and Executive Officers of STEAG. The following table sets forth
the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of STEAG. Unless otherwise indicated, the
current business address of each person is STEAG, Ruttenscheider Stra^e ▇-▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇. Unless otherwise indicated, each such person is a
citizen of the Federal Republic of Germany and has held his or her present
position as set forth below for the past five years, and each such person does
not beneficially own Shares. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with STEAG.
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
---------------- -------------------------------------------
SUPERVISORY BOARD
Prof. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇.............. Chairman of the Supervisory Board (since January 1995)
RAG Aktiengesellschaft Chairman of the Management Board, RAG AG (since
Rellinghauser Stra^e 1-11 January 1995)
45128 Essen, Germany Deputy Chairman of the Management Board, ▇▇▇▇▇-▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (December 1992-December 1994)
▇▇▇▇▇ ▇▇▇▇▇▇▇*....................... Vice-Chairman of the Supervisory Board (since 1989)
Industriegewerkschaft Member of the Executive Board, Industriegewerkschaft
Bergbau, Chemie, Energie Bergbau, Chemie, Energie (since October 1997)
Konigsworther Platz 6 Vice President of Industriegewerkschaft
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Bergbau und Energie (1991-1997)
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇................ Member of the Supervisory Board (since November 1990)
RAG Aktiengesellschaft Deputy Chairman of the Management Board, RAG AG
Rellinghauser Stra^e 1-11 (since January 1997)
45128 Essen, Germany Chairman of the Management Board, Deutsche Steinkohle AG
(since October 1998)
Member of the Management Board, RAG AG (1990-1996)
▇▇▇▇ ▇▇▇▇*........................... Member of the Supervisory Board (since April 1998)
Powerplant Herne Chairman of the Works Council, Herne Powerplant
Hertener Stra^e 16 (since March 1998)
44693 Herne, Germany Acting Chairman of the Works Council, Herne
Powerplant (since 1987)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇*.................. Member of the Supervisory Board (since February 1996)
Powerplant Walsum Deputy Chairman of the Works Council, Walsum Powerplant
Dr.-▇▇▇▇▇▇▇-▇▇▇▇▇▇-Stra^e 129 (since January 1996)
47179 Duisburg, Germany Powerplant ▇▇▇▇▇▇▇ (since 1985)
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇*................. Member of the Supervisory Board (since June 1997)
Powerplants Voerde Director of Voerde Powerplants (since January 1988)
Frankfurter Stra^e 430
46562 Voerde, Germany
▇▇▇▇▇ ▇▇▇▇▇▇▇*....................... Member of the Supervisory Board (since May 1992)
ETC, Decentral Heating and Chairman of the Works Council Essen, ETC, Decentral
Administration Heating and Administration (since July 1992)
Ruttenscheider Stra^▇ ▇-▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
--------
* representative of employees
I-1
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
---------------- ------------------------------------------
Prof. ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇........... Member of the Supervisory Board (since January 1995)
RAG Vertrieb und Handel AG Chairman of the Management Board, RAG Vertrieb und
Rellinghauser Stra^e 1-11 Handel AG (since January 1997)
45128 Essen, Germany Member of the Management Board, Ruhrkohle AG
(January 1993-December 1996)
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.................. Member of the Supervisory Board (since June 1997)
Allianz Versicherungs-AG Member of the Management Board,
Koniginstra^e 28 Allianz-AG Munich (since 1995)
80802 Munchen, Germany Head of Sales, Allianz Versicherungs-AG, Munich and
Allianz Lebensversicherungs AG, Stuttgart (1991-1994)
▇▇▇▇ ▇▇▇*............................ Member of the Supervisory Board (since August 1995)
Industriegewerkschaft Head of Department Tariff Policy II,
Bergbau, Chemie, Energie Industriegewerkschaft Bergbau, Chemie, Energie
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ (since October 1997)
30167 Hannover, Germany Head of Department Tariff Policy, Industriegewerkschaft Bergbau
und Energie (1996-September 1997)
Deputy Head of Department Tariff Policy,
Industriegewerkschaft Bergbau und Energie (1993-1995)
Prof. ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇.............. Member of the Supervisory Board (since December 1998)
RWE Energie AG Member of the Management Board, RWE Energie AG
Kruppstra^e 5 (since 1990)
45128 Essen, Germany Member of the Management Board, RWE AG (1990-1997)
▇▇▇▇▇▇▇ ▇▇▇▇*........................ Member of the Supervisory Board (since November 1997)
Powerplant Lunen Chairman of the Works Council, Lunen Powerplant
Moltkestra ^e 215 (since September 1997)
44536 Lunen, Germany Storeroom worker, Lunen Powerplant (1990-August 1997)
▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇▇.................. Member of the Supervisory Board (since June 1998)
VEW Energie AG Chairman of the Management Board, VEW Energie AG
Rheinlanddamm 24 (since March 1995)
44139 Dortmund, Germany Deputy Chairman of the Management Board, VEW AG
(since January 1993)
▇▇▇▇▇▇ ▇▇▇▇▇▇........................ Member of the Supervisory Board (since June 1998)
VEBA AG Member of the Management Board, VEBA AG (since April 1998)
Bennigsenplatz 1 Chairman of the Management Board, ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (July 1996-March 1998)
Chairman of the Management Board, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
(February 1991-June 1996)
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.................. Member of the Supervisory Board (since June 1998)
Westdeutsche Landesbank Member of the Management Board, Westdeutsche Landesbank
Girozentrale Dusseldorf Munster Girozentrale Dusseldorf Munster (since March 1987)
Herzogstra^e 15
40217 Dusseldorf, Germany
--------
* representative of employees
I-2
NAME AND CURRENT PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
---------------- ------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇*...................... Member of the Supervisory Board (since January 1995)
Chairman of the Central Works Council (since March 1998)
Chairman of the Works Council, Voerde Powerplants
(since December 1994)
Member of the Works Council, Voerde Powerplants
(since 1988)
Attorney ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇............ Member of the Supervisory Board (since June 1997)
Ruhrgas AG Chairman of the Executive Board, Ruhrgas AG (since 1996)
Huttropstra^e 60 Member of the Executive Board, Ruhrgas AG (through 1996)
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇*................... Member of the Supervisory Board (since April 1998)
Powerplant Bergkamen Chairman of the Works Council,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (since March 1998)
59192 Bergkamen, Germany Powerplant electrician (1980-March 1998)
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇............... Member of the Supervisory Board (since June 1997)
RAG Aktiengesellschaft Member of the Management Board, RAG AG
Rellinghauser Stra^e 1-11 (since January 1997)
45128 Essen, Germany Head of Corporate Development Department, Ruhrkohle AG
(July 1995-December 1996)
Member of the Management Board, Rutgerswerke AG
(May 1994-June 1995)
Vice-Member of the Board of Management, Rutgerswerke AG
(September 1993-April 1994)
Executive Manager, Rutgerswerke AG (July 1992-August 1993)
▇▇. ▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇*............ Member of the Supervisory Board (since August 1997)
Industriegewerkschaft Head of Department Energy/Mining, Industriegewerkschaft
Bergbau, Chemie, Energie Bergbau, Chemie, Energie (since October 1997)
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Bergbau und Energie (1991-1997)
MANAGEMENT BOARD
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇................. Chairman of the Management Board (since November 1995)
Member of the Management Board (until October 1995)
▇▇. ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇................. Member of the Management Board (since January 1997)
Member of the Management Board of STEAG Ind. AG
(since October 1992)
Dr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.............. Member of the Management Board (since November 1994)
General Manager, Finance/Accounting of VEBA Kraftwerke
Ruhr AG (April 1972-October 1994)
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇.................... Member of the Management Board (since 1975)
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇................ Member of the Management Board (since October 1991)
--------
* representative of employees
I-3
2. Directors and Executive Officers of Purchaser. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment and employment history for the past five years for
each of the directors and executive officers of Purchaser. Unless otherwise
indicated, the current business address of each person is c/o Purchaser,
Ruttenscheider Stra^▇ ▇-▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇. Unless otherwise indicated,
each such person has held his or her present position as set forth below for
the past five years, and each such person does not beneficially own Shares.
Each such person is a citizen of the Federal Republic of Germany.
EXECUTIVE OFFICERS
▇▇. ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇, President Member of the Management Board of STEAG
(since January 1997)
Member of the Management Board of STEAG
Industrie AG (since October 1992)
▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇, Head of Strategic Planning of STEAG
Chief Financial Officer Industrie AG (since July 1992)
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Secretary Counsel of STEAG AG (since 1993)
I-4
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing the 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:
BANKBOSTON, N.A.
By Overnight, Certified
By First Class Mail: By Hand: or Express Mail
Delivery:
BankBoston, N.A. Securities Transfer
Corporate Reorganization & Reporting BankBoston, N.A.
P.O. Box 9573 Services, Inc. Corporate
Boston, Massachusetts c/o Boston EquiServe L.P. Reorganization
02205-8686 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Galleria ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ 02184
By Facsimile for Confirmation of Facsimile
Eligible Institutions by Telephone:
Only:
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
Questions or requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be obtained from the Information Agent. A shareholder may also
contact brokers, dealers, commercial banks or trust companies for assistance
concerning the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-2586
Banks and Brokers call (▇▇▇) ▇▇▇-▇▇▇▇
All others call toll free (▇▇▇) ▇▇▇-▇▇▇▇
1404-LT-99