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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
LUMEN TECHNOLOGIES, INC.
(NAME OF SUBJECT COMPANY)
LUMEN TECHNOLOGIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
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COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
550242 10 1
(CUSIP NUMBER OF CLASS OF SECURITIES)
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MARTIN E. FRANKLIN
CHAIRMAN OF THE BOARD
555 THEODORE FREMD AVENUE
SUITE B-302
RYE, NEW YORK 10580
(914) 967-9400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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WITH A COPY TO:
ROBERT L. LAWRENCE, ESQ.
KANE KESSLER, P.C.
1350 AVENUE OF THE AMERICAS -- 26TH FLOOR
NEW YORK, NEW YORK 10019
(212) 541-6222
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This Amendment No. 1 ("Amendment No. 1") amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 originally filed on
October 27, 1998 (the "Statement") with respect to the tender offer by
Lighthouse Weston Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of EG&G, Inc., a Massachusetts corporation ("Parent"), to
purchase all outstanding shares of common stock, par value $.01 per share (the
"Shares"), of Lumen Technologies, Inc., a Delaware corporation (the "Company"),
at a price of $7.75 per Share, net to the seller in cash, without interest
thereon. The items of the Statement set forth below are hereby amended and
supplemented as follows:
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
Statement, are set forth in Item 1 above.
(b) Except as described in this Schedule and on Annex I attached hereto,
which is incorporated herein by reference, there are, to the knowledge of the
Company, no material contracts, agreements, arrangements or understandings or
any actual or potential conflicts of interest between the Company or its
affiliates and (i) its executive officers, directors or affiliates or (ii)
Parent, Purchaser, or their respective executive officers, directors or
affiliates.
AGREEMENT AND PLAN OF MERGER
The following is a summary of the Merger Agreement. Such summary is
qualified in its entirety by reference to the Merger Agreement, a copy of which
is filed as Exhibit 1 hereto and is incorporated herein by reference.
Capitalized terms used herein and not otherwise defined have the same meaning as
in the Merger Agreement.
The Offer In the Merger Agreement, the Purchaser has agreed, among other
things, subject to certain conditions, to commence the Offer for all Shares at a
price of $7.75 per Share, net to the seller in cash without interest thereon.
Subject to certain conditions, the Purchaser shall accept for payment, and pay
for, all Shares validly tendered and not withdrawn pursuant to the Offer that
the Purchaser becomes obligated to accept for payment, and pay for, pursuant to
the Offer as soon as practicable after the expiration of the Offer. The
Purchaser expressly reserves the right, subject to compliance with the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to modify the
terms of the Offer, except that, without the consent of the Company, the
Purchaser shall not amend or waive the Minimum Condition, reduce the maximum
number of Shares to be purchased, reduce the price to be paid per Share pursuant
to the Offer, change the form of
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consideration to be paid in the Offer, impose additional conditions to the Offer
or amend any other material term of the Offer in a manner adverse to the holders
of the Shares. Notwithstanding the foregoing, the Purchaser may, in its sole
discretion, (A) extend the Offer if at the scheduled or any extended expiration
date of the Offer any of the conditions set forth in the Merger Agreement
(including the Minimum Condition) shall not be satisfied or waived, until such
time as such conditions are satisfied or waived, and (B) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "Commission") or the staff thereof
applicable to the Offer; provided, however, that, without the Company's written
consent, the Purchaser may not extend the expiration date of the Offer to a date
later than 11:59 p.m. on December 31, 1998.
Approval of the Merger The Delaware Law requires, among other things, that
the adoption of any plan of merger or consolidation of the Company must be
approved and found advisable by the Board of Directors and generally by a
majority of the holders of the Company's outstanding voting securities. The
Board of Directors of the Company has approved the Offer, the Merger and the
Merger Agreement, and the transactions contemplated thereby, and, solely for the
purpose of satisfying the requirements of Section 203 of the Delaware Law, the
Stockholders' Agreement and the transactions contemplated thereby; consequently,
the only additional action of the Company that may be necessary to effect the
Merger is approval by the Company's stockholders if the "short-form" merger
procedure described below is not available. Under the Delaware Law, the
affirmative vote of holders of a majority of the outstanding Shares (including
any Shares owned by the Purchaser) is required to approve the Merger. Such
approval may be obtained by written consent in lieu of a stockholders' meeting.
If the Purchaser acquires, through the Offer or otherwise, voting power with
respect to at least a majority of the outstanding shares, it would have
sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company. The Delaware Law also provides that if a parent
company owns at least 90% of each class of stock of a subsidiary, the parent
company can effect a short-form merger with that subsidiary without the action
of any of the other stockholders of the subsidiary. Accordingly, if, as a result
of the Offer or otherwise, the Purchaser acquires or controls the voting power
of at least 90% of the outstanding Shares, the Purchaser could effect the Merger
without prior notice to, or any action by, any other stockholder of the Company.
The Merger The Merger Agreement provides that as soon as practicable after
the satisfaction or waiver of certain conditions set forth in the Merger
Agreement (but in no event prior to January 11, 1999, unless so requested by the
Parent), subject to the terms and conditions thereof and the satisfaction or
waiver of the other conditions to the Merger and in accordance with the Delaware
Law, the Purchaser shall be merged with and into the Company, the separate
existence of the Purchaser shall cease and the Company shall continue as the
Surviving Corporation. Upon the Effective Time of the Merger, (i) each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held by the Parent, the Purchaser or the Company or any direct or
indirect subsidiary of the Parent, the Purchaser or the Company and Shares held
by stockholders, if any, who are entitled to and who perfect their appraisal
rights (See "Appraisal Rights") under Section 262 of the Delaware Law) will be
cancelled and extinguished and be converted into and represent the right to
receive the Merger Consideration and (ii) each outstanding share of the
Purchaser's capital stock issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly issued, fully paid
and nonassessable share of the same class of capital stock of the Surviving
Corporation. As a result of the Merger, the Company will become a wholly owned
subsidiary of the Parent.
The Merger Agreement provides that the Certificate of Incorporation and
By-Laws of the Purchaser as in effect immediately prior to the Effective Time
will become the Certificate of Incorporation and By-Laws of the Surviving
Corporation until thereafter amended as provided under the Delaware Law except
that the name of the Surviving Corporation will be "Lumen Technologies, Inc."
and the indemnification provisions set forth in the Certificate of Incorporation
and By-Laws of the Surviving Corporation shall be restated to conform to the
indemnification provisions set forth in the Certificate of Incorporation and
Bylaws, respectively, of the Company. In addition, under the Merger Agreement,
the directors of the Purchaser immediately prior to the Effective Time will be
the initial directors of the Surviving Corporation following the Merger, and the
officers of the Company immediately prior to the Effective Time will be the
initial officers of the Surviving Corporation following the Merger, in each case
until their successors are elected and qualified.
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Designation of Directors The Merger Agreement provides that, promptly upon
the acceptance for payment of and payment by the Purchaser for any Shares
pursuant to the Offer, and from time to time thereafter as Shares are accepted
for payment and paid for by the Purchaser, the Purchaser shall be entitled to
designate such number of the Company's directors, rounded to the nearest whole
number, as will give the Purchaser representation on the Company's Board of
Directors equal to the greater of (i) a majority and (ii) the product of the
total number of the Company's directors (after giving effect to the directors
elected in accordance with this procedure) multiplied by the percentage that
such number of Shares so accepted for payment and paid for by the Purchaser
bears to the number of Shares outstanding, and the Company shall, at such time,
take such actions as are necessary to cause the Purchaser's designees to be so
elected or appointed, including increasing the size of the Company's Board of
Directors or using its best efforts to secure the resignations of incumbent
directors or both; provided, however, that, notwithstanding the Purchaser's
right to designate certain of the Company's directors as described above, until
the Effective Time, the Company's directors shall include at least three
directors who were directors on the date of the Merger Agreement (the
"Independent Directors"); provided, further, that, if the number of Independent
Directors shall be reduced below three for any reason whatsoever, any remaining
Independent Director shall be entitled to designate a person to fill such
vacancies and such person shall be deemed to be an Independent Director or, if
no Independent Directors then remain, the other directors shall designate three
persons to fill such vacancies who shall not be designees, stockholders,
directors, officers, employees or affiliates of the Parent or the Purchaser, and
such persons shall be deemed to be Independent Directors.
Notwithstanding anything in the Merger Agreement to the contrary, subject
to the terms of the Company's Certificate of Incorporation and Bylaws, in the
event that the Purchaser's designees are appointed or elected as the Company's
directors, after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of a majority (or, if there
are only one or two Independent Directors, the single or unanimous vote, as the
case may be) of the Independent Directors (who shall act as an independent
committee of the Board of Directors for this purpose) shall be required, and
alone shall be sufficient, to (i) amend or terminate the Merger Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
the Merger Agreement, (iii) extend the time for performance of the Parent's and
the Purchaser's respective obligations under the Merger Agreement, or (iv)
approve any other action by the Company that the Independent Directors
reasonably determine would materially adversely affect the interests of the
stockholders of the Company (other than the Parent, the Purchaser and their
affiliates) with respect to the transactions contemplated by the Merger
Agreement.
Representations and Warranties The Merger Agreement contains certain
customary representations and warranties of the parties. The Company has made
representations and warranties to the Parent and the Purchaser regarding, among
other things: (i) the Company's organization and qualification; (ii) the
Company's subsidiaries; (iii) the Company's capitalization; (iv) the Company's
authority to enter into and perform its obligations under the Merger Agreement;
(v) the compliance of the transactions contemplated by the Merger Agreement with
the Company's or its Subsidiaries' Certificate of Incorporation and Bylaws,
certain agreements and applicable laws; (vi) the accuracy and completeness of
the Company's Exchange Act filings with the Commission and any written
information provided by or on behalf of the Company which is included in the
Schedule 14D-1 and the Offer Documents; (vii) the absence of undisclosed
liabilities; (viii) the absence of certain specified changes in the condition
(financial or other), results of operations, stockholders' equity, business,
assets, properties, liabilities, capitalization or operation of the Company and
its subsidiaries since September 30, 1998; (ix) certain matters relating to the
Company's contracts; (x) transactions with affiliates of the Company; (xi)
employee benefits matters; (xii) properties and liens; (xiii) environmental
matters; (xiv) tax matters; (xv) compliance with laws; (xvi) intellectual
property matters; (xvii) litigation; (xviii) the right of the Company to prepay
its outstanding indebtedness; (xix) the vote required to approve the merger;
(xx) "Year 2000" compliance; (xxi) insurance matters; (xxii) the cessation of
discussions or negotiations with other persons regarding an Acquisition
Proposal; and (xxiii) brokerage fees or commissions.
The Parent and the Purchaser have made representations and warranties to
the Company regarding, among other things: (i) the Parent's and the Purchaser's
organization and qualification; (ii) the Parent's and
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the Purchaser's authority to enter into and perform their respective obligations
under the Merger Agreement; (iii) the compliance of the transactions
contemplated by the Merger Agreement with the Parent's and the Purchaser's
respective charters or By-Laws, certain agreements and applicable laws; (iv) the
accuracy and completeness of the documents filed by the Parent and the Purchaser
with the Commission in connection with the Offer or provided to the Company for
inclusion in the Schedule 14D-9; (v) the interim operations of the Purchaser;
(vi) the availability of funds necessary to purchase the Shares; and (vii)
brokerage fees or commissions.
The representations and warranties contained in the Merger Agreement shall
expire with, and be terminated and extinguished upon, consummation of the
Merger.
Certain Conditions of the Offer.
Pursuant to the Merger Agreement, the Minimum Condition and the other
conditions to the Offer are as follows:
Notwithstanding any other provisions of the Offer or the Merger
Agreement, the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act, to pay for any Shares
tendered pursuant to the Offer unless the number of Shares tendered and not
withdrawn not later than the date and time of expiration of the Offer,
shall equal at least a majority of the Fully Diluted Shares (as defined
below). For purposes of the Merger Agreement, "Fully Diluted Shares" means
all outstanding securities entitled generally to vote in the election of
directors of the Company after giving effect to the exercise or conversion
of all options, rights and securities exercisable or convertible into such
voting securities (other than (i) the exercise of Company Options that are
exercisable for Shares that would, following such exercise, be subject to
the Stockholders' Agreement and (ii) the conversion of the Convertible
Notes). The term "Expiration Date" means 12:00 midnight, New York City
time, on Tuesday, November 24, 1998, unless and until the 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 the Purchaser, shall expire.
Furthermore, notwithstanding any other provisions of the Offer or the
Merger Agreement, the Purchaser shall not be required to accept for payment
or, subject as aforesaid, to pay for any Shares tendered pursuant to the
Offer unless all applicable waiting periods under the HSR Act shall have
expired or been terminated.
Furthermore, notwithstanding any other provisions of the Offer or the
Merger Agreement, the Purchaser shall not be required to accept for payment
or, subject to the previous provisions, to pay for any Shares not accepted
for payment or paid for, and may terminate the Offer if, at any time on or
after the date of the Merger Agreement and before the Expiration Date, any
of the following conditions exists:
(a) the Purchaser is not entitled to vote its Shares for the
Merger; or
(b) except for matters (i) which are attributable to the
announcement or performance of the Merger Agreement and the transactions
contemplated thereby or (ii) which generally affect the economy or the
industry in which the Company is engaged, any change shall have occurred
in the condition (financial or other), results of operations,
stockholders' equity, business, assets, properties, liabilities or
capitalization of the Company and its Subsidiaries which has resulted in
a Material Adverse Effect; or
(c) there shall have been instituted or be pending before any
Governmental Entity any action, proceeding, application, claim or
counterclaim or any judgment, order or injunction sought or any other
action taken by any Governmental Entity or by any person who has made an
Acquisition Proposal, which (i) challenges the acquisition by the Parent
or the Purchaser (or any other affiliate of the Parent) of any Shares
pursuant to the Offer, the Merger or the Stockholders' Agreement,
restrains, prohibits or materially delays the making or consummation of
the Offer or the Merger or the transactions contemplated by the Merger
Agreement or the Stockholders' Agreement prohibits the performance of
any of the contracts or other arrangements entered into by the Parent or
the Purchaser (or any other affiliates of the Parent) in connection with
the acquisition of the Company, seeks to obtain any material amount of
damages, or otherwise directly or indirectly materially
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adversely affects the Offer or the Merger or the transactions
contemplated by the Merger Agreement or the Stockholders' Agreement,
(ii) seeks to prohibit or limit materially the ownership or operation by
the Company, the Parent or the Purchaser (or any other affiliate of the
Parent) of all or any material portion of the business or assets of the
Company and its subsidiaries taken as a whole or of the Parent and its
affiliates, or to compel the Company, the Parent or the Purchaser (or
any other affiliate of the Parent) to dispose of or to hold separate all
or any material portion of the business or assets of the Parent or any
of its affiliates or of the Company or any of its subsidiaries as a
result of the transactions contemplated by the Merger Agreement, (iii)
seeks to impose any material limitation on the ability of the Company,
the Parent, or the Purchaser (or any other affiliate of the Parent) to
conduct the Company's or any subsidiary's business or own such assets,
(iv) seeks to impose or confirm any material limitation on the ability
of the Parent or the Purchaser (or any other affiliate of the Parent) to
acquire or hold, or to exercise full rights of ownership of, any Shares,
including the right to vote such Shares on all matters properly
presented to the stockholders of the Company, (v) seeks to require
divestiture by the Purchaser or any of its affiliates of all or any of
the Shares, or (vi) otherwise has resulted in, or has a substantial
likelihood of resulting in, a Material Adverse Effect; or
(d) there shall have been entered or issued any preliminary or
permanent judgment, order, decree, ruling or injunction or any other
action taken by any Governmental Entity, whether on its own initiative
or the initiative of any other person, which (i) restrains, prohibits or
materially delays the making or consummation of the Offer or the Merger
or the transactions contemplated by the Merger Agreement or the
Stockholders' Agreement, prohibits the performance of any of the
contracts or other arrangements entered into by the Parent or the
Purchaser (or any other affiliates of the Parent) in connection with the
acquisition of the Company or otherwise directly or indirectly
materially adversely affects the Offer or the Merger or the transactions
contemplated by the Merger Agreement or the Stockholders' Agreement,
(ii) prohibits or limits materially the ownership or operation by the
Company, the Parent or the Purchaser (or any other affiliate of the
Parent) of all or any material portion of the business or assets of the
Company and its Subsidiaries taken as a whole or of the Parent and its
affiliates, or compels the Company, the Parent or the Purchaser (or any
other affiliate of the Parent) to dispose of or to hold separate all or
any material portion of the business or assets of the Parent or any of
its affiliates or of the Company or any of its Subsidiaries as a result
of the transactions contemplated by the Merger Agreement, (iii) imposes
any material limitation on the ability of the Company, the Parent, or
the Purchaser (or any other affiliate of the Parent) to conduct the
Company's or any Subsidiary's business or own such assets, (iv) imposes
or confirms any material limitation on the ability of the Parent or the
Purchaser (or any other affiliate of the Parent) to acquire or hold, or
to exercise full rights of ownership of, any Shares, including the right
to vote such Shares on all matters properly presented to the
stockholders of the Company, (v) requires divestiture by the Purchaser
or any of its affiliates of all or any of the Shares, or (vi) otherwise
has resulted in, or has a substantial likelihood of resulting in, a
Material Adverse Effect; or
(e) there shall be any statute, rule or regulation enacted,
promulgated, entered, enforced or deemed applicable to the Offer, the
Merger, the Merger Agreement or the Stockholders' Agreement, or any
other action shall have been taken by any Governmental Entity, other
than the routine application to the Offer, the Merger or the
transactions contemplated by the Stockholders' Agreement of waiting
periods under the HSR Act that results in, directly or indirectly, any
of the consequences referred to in clauses (i) through (vi) of paragraph
(c) above; or
(f) the Company shall have failed to perform any material
obligation or to comply with any material agreement or covenant of the
Company to be performed or complied with by it under the Merger
Agreement within five days following written notice of such failure by
the Parent to the Company; or
(g) (i) the Board of Directors of the Company or any committee
thereof shall have (A) withdrawn or modified in a manner adverse to the
Parent or the Purchaser its approval or
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recommendation of the Offer, the Merger, the Merger Agreement or the
Stockholders' Agreement or (B) approved or recommended any Acquisition
Proposal, (ii) the Company shall have entered into, or publicly
announced its intention to enter into, any agreement with respect to any
Acquisition Proposal or (iii) the Board of Directors of the Company or
any committee thereof shall have resolved to do any of the foregoing; or
(h) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality shall
have been breached or not be true and correct in any respect or any such
representations and warranties that are not so qualified shall have been
breached or not be true and correct in any material respect, in each
case at the date of the Merger Agreement (except to the extent that any
such representation or warranty refers specifically to another date, in
which case such representation or warranty shall be true and correct as
of such other date); or
(i) except as to matters which are attributable to the announcement
or performance of the Merger Agreement and the transactions contemplated
thereby, any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to having or
resulting in a Material Adverse Effect shall have been breached or not
be true and correct in any respect or any such representations and
warranties that are not so qualified shall have been breached or not be
true and correct and the effect of such breach or failure to be true or
correct shall be that the matter shall have a Material Adverse Effect,
in each case at the scheduled or extended expiration of the Offer
(except to the extent that any such representation or warranty refers
specifically to another date, in which case such representation or
warranty shall be true and correct as of such other date); or
(j) the Merger Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of the Parent and the
Purchaser (and the other affiliates of the Parent) and may be asserted by the
Parent and the Purchaser (and the other affiliates of the Parent) regardless of
the circumstances giving rise to any such condition and may be waived by the
Parent or the Purchaser, in whole or in part, at any time and from time to time,
in their sole discretion. The failure by the Parent or the Purchaser at any time
to exercise any of the foregoing rights will not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right will be deemed an ongoing right that may be
asserted at any time and from time to time.
Conditions to the Merger
The obligations of each of the Purchaser, the Parent and the Company to
consummate the Merger are subject to the fulfillment, at or prior to the
Effective Time, of each of the following conditions:
(i) the Parent or the Purchaser shall have made, or caused to be made,
the Offer on the terms and conditions set forth in the Merger Agreement and
shall have purchased, or caused to be purchased, all Shares validly
tendered and not withdrawn pursuant to the Offer;
(ii) the Merger Agreement and the Merger shall have been approved and
adopted by the requisite vote or consent of the stockholders of the
Company, if any, required by the Delaware Law and the Company's Certificate
of Incorporation;
(iii) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; and
(iv) no preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by any Governmental
Entity, nor any statute, rule, regulation or executive order promulgated or
enacted by any Governmental Entity shall be in effect, which would make the
acquisition or holding by the Parent or its subsidiaries of the Shares or
shares of common stock of the Surviving Corporation illegal or otherwise
prevent the consummation of the Merger.
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In addition, the obligation of the Purchaser and the Parent to consummate
the Merger is subject to the further condition that at or prior to the Effective
Time, all governmental and third-party consents and approvals required to be
obtained by the Company to consummate the Merger shall have been obtained,
except for (a) consents required under the Company's credit facility with
NationsBank, National Association as in effect on the date of the Merger
Agreement and (b) such consents and approvals where the failure to obtain such
consent or approval would not have a Material Adverse Effect.
Acquisition Proposals
The Company has agreed in the Merger Agreement that it shall not, and shall
not authorize or permit any of its subsidiaries, or any of its or their
officers, directors, employees, representatives, agents or affiliates, including
any investment banker, attorney or accountant retained by the Company or any of
its subsidiaries, to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action to
facilitate, any inquiries or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
or (ii) enter into, maintain, continue or otherwise participate in any
discussions or negotiations regarding any Acquisition Proposal with any person,
entity or group other than the Parent, the Purchaser or their respective direct
or indirect subsidiaries or affiliates (a "Third Party"). Notwithstanding the
foregoing, the Company, its subsidiaries, and their respective officers,
directors, employees, representatives, agents and affiliates, including any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries, may (i) in the case of a Qualified Acquisition Proposal only,
furnish or cause to be furnished information concerning the Company's business,
properties or assets to a Third Party (subject to such Third Party executing a
confidentiality agreement on terms no less favorable to the Company than those
in the confidentiality agreement previously entered into by the Parent and the
Company), (ii) in the case of a Qualified Acquisition Proposal only, enter into,
participate in, conduct or engage in discussions or negotiations with such Third
Party, (iii) to the extent that the Board of Directors of the Company is
required by its fiduciary duties, as advised by counsel, take any position with
respect to an Acquisition Proposal in accordance with Rules 14a-9 and 14e-2
promulgated under the Exchange Act, and (iv) in the case of a Qualified
Acquisition Proposal only and only prior to the acceptance for payment of that
number of Shares tendered pursuant to the Offer sufficient to satisfy the
Minimum Condition and in compliance with the provisions of the Merger Agreement,
enter into an agreement to consummate a Qualified Acquisition Proposal.
"Acquisition Proposal" means an inquiry, offer or proposal regarding any of
the following (other than the transactions contemplated by the Merger Agreement)
involving the Company or its subsidiaries: (i) any merger, reorganization,
consolidation, share exchange, recapitalization, business combination,
liquidation, dissolution or other similar transaction involving, or any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of, all or any
significant portion of the assets or 25% or more of the equity securities of,
the Company or any of its subsidiaries, in a single transaction or series of
related transactions; (ii) any tender offer or exchange offer for 25% or more of
the outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), in connection therewith; or (iii) any public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
"Qualified Acquisition Proposal" means an unsolicited, bona fide, written
Acquisition Proposal made by a Third Party that the Board of Directors of the
Company determines in its good faith judgment to be more favorable to the
Company's stockholders than the Offer and the Merger (based on the opinion, with
only customary qualifications, of the Company's independent financial advisor
that the value of the consideration to the Company's stockholders provided for
in such proposal exceeds the value of the consideration to the Company's
stockholders provided for in the Merger Agreement by the Offer and the Merger)
and for which financing, to the extent required, is then committed or which, in
the good faith judgment of the Board of Directors of the Company (based on the
advice of the Company's independent financial advisor), is reasonably capable of
being obtained by such Third Party and which Acquisition Proposal, in the good
faith judgment of the Board of Directors of the Company, is likely to be
consummated.
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Such provisions do not prohibit the Company from making such disclosure to
stockholders that, in the judgment of the Board of Directors of the Company, as
advised by counsel, may be required by law or necessary to discharge any
fiduciary duty imposed thereby.
Pursuant to the Merger Agreement, the Company must immediately notify the
Parent of, and disclose to the Parent all details of, (i) any Acquisition
Proposal it receives, (ii) any written indications that any person is interested
in making an Acquisition Proposal or (iii) the initiation and status of
discussions or negotiations relating to any Acquisition Proposal (it being
understood that pursuant to the Merger Agreement any Acquisition Proposal must
be a Qualified Acquisition Proposal). In the event that the Company furnishes
any nonpublic information to any party other than the Parent, it shall
simultaneously provide the Parent with copies of or access to all such
information.
In addition, the Company may not enter into any agreement with any Third
Party in connection with a Qualified Acquisition Proposal unless (i) at least
three business days prior thereto the Company shall have provided the Parent and
the Purchaser a copy of the Qualified Acquisition Proposal, (ii) within such
three business day period, the Parent and the Purchaser do not make an offer
which, in the good faith judgment of the Board of Directors of the Company
(based on the advice of the Company's independent financial advisor) is at least
as favorable to the Company's stockholders as such Acquisition Proposal, (iii)
the Company shall have terminated the Merger Agreement in accordance with its
terms, and (iv) prior thereto the Company shall have paid the fees specified in
the Merger Agreement, and shall have deposited $500,000 in trust with a
Qualified Commercial Bank for the payment of the expenses specified in the
Merger Agreement.
Conduct of Business
Pursuant to the Merger Agreement, the Company has agreed that, except as
otherwise expressly contemplated thereby, prior to the Effective Time: (a) the
business of the Company and it subsidiaries shall in all material respects be
conducted only in, and the Company and its subsidiaries shall not take any
material action except in, the ordinary course of business and consistent with
past practice, and the Company and its subsidiaries shall use all reasonable
efforts, consistent with past practice, to maintain and preserve its and each
subsidiary's business organization, assets, employees and advantageous business
relationships and (b) the Company shall not, and shall not permit any of its
subsidiaries to, directly or indirectly, do any of the following:
(i) other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent: (A) declare, set
aside or pay any dividends on, or make any other distributions (whether in
cash, stock or other property) in respect of, any of its capital stock; (B)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution of shares of its capital stock; or (C) purchase, redeem or
otherwise acquire any shares of its capital stock or any other securities
thereof or any rights, warrants or options to acquire any such shares or
other securities, other than the payment to holders of Company Options
outstanding as of the date of the Merger Agreement of an amount equal to
the difference between the price per Share to be paid in the Offer and the
exercise price of such Company Options in exchange for the cancellation or
termination of such Company Options;
(ii) issue, deliver, sell, pledge or otherwise dispose of or encumber,
any shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, voting securities or convertible securities (other than
the issuance of Shares upon the exercise of Company Options or conversion
of Convertible Notes outstanding as of the date of the Merger Agreement);
(iii) amend its Certificate of Incorporation or Bylaws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets or any stock of, or by
any other manner, any business or any corporation, partnership, joint
venture, limited liability company, association or other business
organization or division thereof or
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(B) any assets that are material, in the aggregate, to the Company and its
subsidiaries, taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice;
(v) except in the ordinary course of business and consistent with past
practice, sell, lease, license, pledge or otherwise dispose of or encumber
any assets of the Company or any of its subsidiaries (including any
indebtedness owed to them or any claims held by them);
(vi) whether or not in the ordinary course of business or consistent
with past practice, sell or dispose of any assets material to the Company
and its subsidiaries, taken as a whole (including any accounts, leases,
contracts or intellectual property or any assets or stock of any
subsidiary, but excluding the sale of products in the ordinary course of
business consistent with past practice);
(vii) except as permitted by the Merger Agreement, enter into an
agreement with respect to any merger, consolidation, liquidation or
business combination, or any acquisition or disposition of all or
substantially all of the assets or securities of the Company;
(viii) incur or suffer to exist any indebtedness for borrowed money
other than Permitted Indebtedness or guarantee any such indebtedness of
another person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, or (B) make any loans, advances
(other than to employees of the Company in the ordinary course of business)
or capital contributions to, or investments in, any other person other than
between the Company and its subsidiaries or any of them;
(ix) make or agree to make any new capital expenditures or
expenditures not already in process on the date of the Merger Agreement
with respect to property, plant or equipment in excess of $150,000 in the
aggregate for the Company and its subsidiaries, taken as a whole;
(x) make any change in accounting methods, principles or practices,
except insofar as may have been required by a change in generally accepted
accounting principles or, except as so required, change any assumption
underlying, or method of calculating, any bad debt, contingency or other
reserve;
(xi) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Commission Filings or the September 30 Financial Information or incurred
thereafter in the ordinary course of business consistent with past
practice, or waive any material benefits of, or agree to modify in any
material respect, any material confidentiality, standstill or similar
agreements to which the Company or any of its subsidiaries is a party;
(xii) except in the ordinary course of business, materially modify,
amend or terminate any material contract or agreement to which the Company
or any of its subsidiaries is party, or knowingly waive, release or assign
any material rights or claims;
(xiii) other than in the ordinary course of business consistent with
past practice, enter into any material contracts or agreements relating to
the distribution, sale or marketing by third parties of the products of, or
products licensed by, the Company or any of its subsidiaries;
(xiv) except as required to comply with applicable law or agreements,
plans or arrangements existing on the date of the Merger Agreement and
except as set forth on the Disclosure Schedules attached to the Merger
Agreement, (A) adopt, enter into, terminate or amend any written employment
agreement or any oral employment agreement that is not terminable by the
Company or any subsidiary without any penalty, on notice of thirty days or
less, or any benefit plan for the benefit or welfare of any current or
former director, officer or employee, (B) increase in any material respect
the compensation or fringe benefits of, or pay any bonus to, any director,
officer or key employee, (C) pay any material benefit not provided for
under any benefit plan or employment or other compensation arrangement,
other than the
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payment of bonuses following the date of the Merger Agreement to employees
(other than officers and directors of the Company or any subsidiary) in the
ordinary course of business and of a nature and in amounts consistent with
past practice, (D) grant any awards under any bonus, incentive, performance
or other compensation plan or arrangement or benefit plan (including the
grant of stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the removal of
existing restrictions in any benefit plans or agreements or awards made
thereunder), or (E) take any action other than in the ordinary course of
business consistent with past practice to fund or in any other way secure
the payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or benefit plan;
(xv) make any tax election or, except in the ordinary course of
business consistent with past practice, settle or compromise any federal,
state, local or foreign tax liability;
(xvi) issue any options or commence any offering of Shares pursuant to
the Company's employee stock purchase plan; or
(xvii) authorize, commit or agree, in writing or otherwise, to take
any of the foregoing actions.
Indemnification and Insurance
Through the third anniversary of the Effective Time, the Parent will
maintain in effect for the benefit of the directors and officers of the Company,
as of the date of the Merger Agreement, directors' and officers' liability
insurance policies with coverages and other terms substantially as favorable to
such directors and officers as is in effect on the date of the Merger Agreement.
In no event, however, will the Parent be required to expend more than an amount
per year equal to 150% of the current annual premium paid by the Company as of
the date of the Merger Agreement for such insurance coverage.
The Parent and the Purchaser have agreed in the Merger Agreement that all
rights to indemnification, limitation of liability, exculpation, advancement of
expenses and any and all similar rights existing on the date of the Merger
Agreement in favor of present or former employees, agents, directors or officers
of the Company and its subsidiaries as provided in their respective charters or
by-laws (each as in effect on the date of the Merger Agreement) shall survive
the Offer and the Merger and shall continue in full force and effect for a
period of six years from the Effective Time; provided, however, that in the
event any claim or claims are asserted or made within such six year period, all
rights to indemnification in respect to any such claim or claims shall continue
until the disposition of such claims.
The Merger Agreement also provides that the Company shall, to the fullest
extent permitted under applicable law and regardless of whether the Merger
becomes effective, indemnify and hold harmless, and, after the Effective Time,
the Surviving Corporation shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless, each present and former director,
officer, employee, fiduciary and agent of the Company and each Subsidiary and
their respective heirs, executors, administrators, personal representatives or
assigns (collectively, the "Indemnified Parties") against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), whether civil, criminal, administrative or investigative (a
"Proceeding"), arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee, fiduciary or agent, whether
occurring before or after the Effective Time, to the same extent as provided in
the Company's Certificate of Incorporation or By-laws as in effect on the date
of the Merger Agreement, in each case for a period of six years after the date
of the Merger Agreement. In the event that any claim for indemnification is
asserted or made within such six-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.
Each Indemnified Party shall give written notice to the Company or the
Surviving Corporation, as the case may be (the "Indemnifying Party"), promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any Proceeding resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the
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defense of such Proceeding, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld, conditioned or delayed); and,
provided, further, that the failure of any Indemnified Party to give notice as
provided in the Merger Agreement shall not relieve the Indemnifying Party of its
obligations under the Merger Agreement unless and to the extent that the
Indemnifying party is adversely affected by such failure. The Indemnified party
may participate in such defense at such party's expense; provided, however, that
the Indemnifying Party shall pay such expense if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. In the event that the Indemnifying Party does not assume the defense
pursuant to the terms of the Merger Agreement of any Proceeding of which the
Indemnifying Party receives notice, any expenses incurred by the Indemnified
Party in defending such Proceeding shall be paid by the Indemnifying Party in
advance of the final disposition of such matter, provided, however, that the
payment of such expenses incurred by the Indemnified Party in advance of the
final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnified Party to repay all amounts so
advanced in the event that it shall ultimately be determined that the
Indemnified Party is not entitled to be indemnified by the Indemnifying Party in
accordance with the Merger Agreement. The Indemnified Party shall cooperate with
the Indemnifying Party and provide access to all documents necessary or
beneficial to the defense of any Proceeding. Neither the Company nor the
Surviving Corporation shall be liable for any settlement of any Proceeding
effected without its written consent.
The Merger Agreement also provides that in the event the Company or the
Surviving Corporation or any of their respective successors or assigns
consolidates with or merges into any other person and will not be the continuing
or surviving corporation or entity of such consolidation or merger, then, and in
each such case, the Parent will either guarantee the indemnification obligations
described above or cause to be made proper provision so that the successors and
assigns of the Company or the Surviving Corporation, as the case may be, assume
the indemnification obligations described above.
Fees and Expenses
The Merger Agreement provides that, except as otherwise provided in the
Merger Agreement, each party thereto shall bear all of the fees and expenses
incurred by it in connection with the negotiation and performance of the Merger
Agreement and no party to the Merger Agreement may recover any such fees and
expenses from another party upon termination of the Merger Agreement.
If, however, (i) the Company's Board of Directors, whether or not in the
exercise of its fiduciary or other legal duties, either (A) shall have failed to
approve or recommend, or shall have withdrawn or adversely modified or taken a
public position materially inconsistent with its approval or recommendation of,
the Offer, the Merger or the Merger Agreement and the Parent shall have elected
to terminate the Merger Agreement as a result thereof, or (B) take any action
(other than as expressly permitted under the terms of the Merger Agreement) with
respect to any Qualified Acquisition Proposal other than to recommend rejection
of the Qualified Acquisition Proposal (including taking a position of neutrality
or failing to take any position within ten business days after the making or
commencement of a Qualified Acquisition Proposal); or (ii) prior to the final
expiration of the Offer, an Acquisition Proposal shall have become publicly
known and the Merger Agreement is terminated (other than as a result of a
material breach of the Merger Agreement by the Parent or the Purchaser) and,
within 12 months after such termination, (A) the Company enters into a merger or
other agreement that contemplates the consummation of an Acquisition Proposal at
a price equal to or greater than the aggregate consideration payable for Shares
pursuant to the Offer and the Merger or (B) the holders of Shares become
entitled to receive consideration per Share greater than the Merger
Consideration in a transaction or series of transactions in connection with an
Acquisition Proposal or (iii) the Company elects to terminate the Merger
Agreement in order to enter into an agreement with a Third Party to consummate a
Qualified Acquisition Proposal, then, in each such case, the Company shall pay
the Parent $7,450,000 in cash and an amount equal to the reasonable
out-of-pocket expenses incurred by the Parent and the Purchaser in connection
with the evaluation, negotiation, implementation and consummation of the
transactions contemplated by the Merger Agreement (including fees and expenses
of legal counsel, solicitors, accountants, printers
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and financial advisors and investment bankers); provided, however, that, in no
event shall the amount of such expenses exceed $500,000. The Company is also
required to reimburse the Parent for up to $500,000 in expenses in certain
circumstances if the Parent terminates the Merger Agreement because of a failure
by the Company to perform in any respect any of its material obligations under
the Merger Agreement.
Termination
The Merger Agreement may be terminated at any time prior to the Effective
Time (whether prior to or after approval by the stockholders of the Company), as
follows:
(a) by the mutual written consent of the Boards of Directors of the
Parent and the Company; or
(b) by the Company:
(i) if neither the Parent nor any of its subsidiaries or affiliates
shall have (A) publicly announced its intention to make the Offer no
later than the first business day following the date of the Merger
Agreement or (B) commenced the Offer within five business days of such
announcement unless such failure to commence is due to a material breach
of the Merger Agreement by the Company; or
(ii) if, in the absence of any material breach of the Merger
Agreement by the Company, (A) the Offer shall have been terminated or
the Purchaser shall have allowed the Offer to expire without the
purchase of such number of Shares thereunder as satisfies the Minimum
Condition; or (B) neither the Parent nor any of its subsidiaries or
affiliates shall have paid for all Shares validly tendered pursuant to
the Offer and not withdrawn within 60 days after the commencement of the
Offer; or
(iii) if the Effective Time shall not have occurred on or before
March 31, 1999 due to a failure of any of the conditions to the
obligation of the Company to effect the Merger set forth in the Merger
Agreement; or
(iv) if, prior to the purchase of any Shares pursuant to the Offer,
the Parent or the Purchaser fails to perform any of their respective
obligations under the Merger Agreement and such failure or
nonperformance materially impairs the Parent's and the Purchaser's
ability to consummate the Offer or the Merger; or
(v) if the Company has, in accordance with the terms of the Merger
Agreement, entered into an agreement with a Third Party to consummate a
Qualified Acquisition Proposal; or
(vi) if there shall have been a breach of any material
representation and warranty of the Purchaser or the Parent set forth in
the Merger Agreement prior to the expiration or termination of the
Offer, which breach is not cured within five days following written
notice thereof by the Company to the Purchaser and the Parent; or
(c) by the Parent:
(i) if, due to an occurrence that would result in a failure to
satisfy any of the conditions to the Offer described in the Merger
Agreement, the Parent or any of its subsidiaries or affiliates shall
have (A) failed to commence the Offer within five business days of the
date on which the Purchaser's intention to make the Offer is publicly
announced; (B) terminated the Offer without the purchase of any Shares
thereunder; or (C) failed to pay for Shares pursuant to the Offer within
60 days after the commencement of the Offer; or
(ii) if the Effective Time shall not have occurred on or before
March 31, 1999 due to a failure of any of the conditions to the
obligations of the Parent and the Purchaser to effect the Merger set
forth in the Merger Agreement otherwise than as a result of a material
breach or default by the Parent or Purchaser under the Merger Agreement;
or
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(iii) if the Company's Board of Directors, whether or not in the
exercise of their fiduciary or other legal duties, either (A) shall have
failed to approve or recommend, or shall have withdrawn or adversely
modified or taken a public position materially inconsistent with its
approval or recommendation of, the Offer, the Merger or the Merger
Agreement or (B) takes any action (other than as expressly permitted
under the Merger Agreement) with respect to any Qualified Acquisition
Proposal other than to recommend rejection of the Qualified Acquisition
Proposal (including taking a position of neutrality or failing to take
any position within 10 business days after the making or commencement of
a Qualified Acquisition Proposal); or
(iv) if, prior to the purchase of any Shares pursuant to the Offer,
the Company fails to perform in any respect any of its material
obligations under the Merger Agreement which failure to perform, (other
than failure to perform an obligation described under the heading
"Acquisition Proposals," as to which there will be no cure period) is
not cured within five days following notice thereof by the Parent to the
Company; or
(d) by either the Company or the Parent, if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance
for payment of, or payment for, Shares pursuant to the Offer or the Merger
and such order, decree or ruling or other action shall have become final
and nonappealable; provided, however, that the party seeking to terminate
the Merger Agreement pursuant to this provision shall have performed its
obligations under the Merger Agreement to use reasonable efforts to avoid
such event.
Amendment
Subject to the amendment provision described above under "-- Designation of
Directors," the Merger Agreement may not be amended except by action of the
Boards of Directors of each of the parties to the Merger Agreement, set forth in
an instrument in writing signed on behalf of each of the parties; provided,
however, that if the Merger Agreement and the Merger are subject to stockholder
approval, then after such approval, no amendment shall be made which by law
requires further approval by such stockholders without obtaining such further
approval.
Waiver
At any time prior to the Effective Time, whether before or after any
meeting of the stockholders of the Company to vote on the Merger, any party to
the Merger Agreement, subject to the waiver provisions described above under
"-- Designation of Directors," by action taken by its Board of Directors,
subject to the provisions of the Merger Agreement, may (i) extend the time for
the performance of any of the obligations or other acts of any other party to
the Merger Agreement or (ii) waive compliance with any of the agreements of any
other party or with any conditions to its own obligations, provided, however,
that if the Merger Agreement and the Merger are subject to stockholder approval
then, after such approval, no waiver shall be made which by law requires further
approval by such stockholders without obtaining such further approval. Any
agreement on the part of a party to the Merger Agreement to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party by a duly authorized officer.
Guarantee
Pursuant to the Merger Agreement, the Parent has unconditionally and
irrevocably guaranteed the Purchaser's obligations under the Merger Agreement
and has agreed to be liable for any breach of the Merger Agreement by the
Purchaser.
Treatment of Options
Pursuant to terms of the Merger Agreement, as of the Effective Time, the
Parent shall assume the Option Plan and the obligations of the Company
thereunder and all of the Company Options which are then outstanding shall be
assumed by the Parent. Immediately after the Effective Time, each Company Option
shall constitute an option to acquire, on the same terms and conditions as were
applicable to Company Options
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immediately prior to the Effective Time, such number of shares of common stock,
par value $1.00 per share, of the Parent (the "Parent Common Stock") as is equal
to the number of Shares subject to such Company Option immediately prior to the
Effective Time multiplied by a fraction, the numerator of which is the Merger
Consideration and the denominator of which is the average closing price of the
Parent Common Stock on the NYSE, as reported in The Wall Street Journal (or if
not so reported in another authoritative source), for the ten trading days
ending on the date of the expiration of the Offer (with any fraction resulting
from such multiplication to be rounded down to the nearest whole number). The
exercise price per share of each such assumed Company Option shall be equal to
the per share exercise price of such Company Option immediately prior to the
Effective Time multiplied by a fraction, the numerator of which is the average
closing price of the Parent Common Stock on the NYSE, as reported in The Wall
Street Journal (or if not so reported in another authoritative source), for the
ten trading days ending on the date of the expiration of the Offer and the
denominator of which is the Merger Consideration (with any fraction resulting
from such multiplication to be rounded up to the nearest whole cent). Except as
otherwise provided in the Merger Agreement, the term, exercisability, vesting
schedule, status and all of the other terms of the Company Options shall
otherwise remain unchanged.
As soon as practicable after the Effective Time, the Parent shall, with
respect to all shares of Parent Common Stock subject to such Company Options,
(i) either (x) file a Registration Statement on Form S-8 (or any successor form)
under the Securities Act or (y) file any necessary amendments to the Company's
previously filed Registration Statements on Form S-8 in order that the Parent
will be deemed a "successor registrant" thereunder, and, in either event, shall
use all reasonable efforts to maintain the effectiveness of such registration
statement for so long as such Company Options remain outstanding, and (ii) take
all actions necessary to have such shares of Parent Common Stock approval for
listing on the NYSE subject to official notice of issuance.
Notwithstanding the foregoing, pursuant to the terms of the Merger
Agreement and the Option Plan, the Compensation Committee of the Board of
Directors has resolved to vest all Company Options upon the closing of the Offer
and to cash out the Company Options of holders requesting the Company to do so.
Holders of Company Options who request that such Company Options be cashed out
shall be paid an amount equal to the difference between the price per Share to
be paid in the Offer and the exercise price, and such Company Options shall
thereupon be cancelled. Such payment shall be made within one business day of
the closing of the Offer.
THE STOCKHOLDERS' AGREEMENT
The following is a summary of the Stockholders' Agreement, a copy of which
is filed as Exhibit 5 hereto and is incorporated herein by reference. This
summary does not purport to be complete and is qualified in its entirety by
reference to the Stockholders' Agreement.
The Parent and the Purchaser have entered into the Stockholders' Agreement,
dated as of October 21, 1998 with Martin E. Franklin, Ian G.H. Ashken, Richard
D. Capra and George B. Clairmont (the "Management Stockholders"), with respect
to 993,684 Shares outstanding as of the date of the Merger Agreement and
beneficially owned by the Management Stockholders and an additional 1,752,338
shares subject to options held by the Management Stockholders. Pursuant to the
Stockholders' Agreement, each of the Management Stockholders agreed: (i) to
validly tender and not withdraw, pursuant to and in accordance with the terms of
the Offer, (x) within five business days after the commencement of the Offer,
all Shares owned by such Management Stockholder as of the date of the
Stockholders' Agreement, and (y) prior to the scheduled expiration of the Offer,
any additional Shares acquired after the date of the Stockholders' Agreement by
such Management Stockholder; (ii) to vote all Shares that such Management
Stockholder is entitled to vote to approve and adopt the Merger Agreement, the
Merger and all agreements related to the Merger and any actions related thereto;
(iii) not to vote in favor of any Acquisition Proposal reorganization,
recapitalization, liquidation or winding up of the Company or any other
extraordinary transaction involving the Company, or any corporate actions the
consummation of which would frustrate the purposes, or prevent or delay the
consummation, of the transactions contemplated by the Merger Agreement; (iv)
revoke any and all previous proxies granted with respect to such Management
Stockholders' Shares, and to appoint the Purchaser
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as such Management Stockholder's attorney-in-fact and proxy to vote the Shares
in such manner and upon such matters as the Purchaser shall, in the Purchaser's
sole discretion, deem proper; (v) not to grant any proxies or enter into any
voting trust or other arrangement with respect to the voting of any Shares; and
(vi) not to sell, assign, transfer, encumber or otherwise dispose of any Shares,
or enter into any contract, option or other arrangement or understanding with
respect to the sale, assignment, transfer, encumbrance or other disposition of,
any Shares, except for transfers by gift of options to purchase Shares to any
charitable organization, with the prior written consent of the Purchaser.
The proxy grant pursuant to the Stockholders' Agreement shall be revoked
upon termination of the Stockholders' Agreement in accordance with its terms.
The Stockholders' Agreement, and the Management Stockholders' obligations
thereunder, shall expire on the first to occur of (i) the Effective Time or (ii)
the termination of the Merger Agreement in accordance with its terms. In
addition, the Stockholders' Agreement may be terminated by the Purchaser and the
Parent upon written notice to the Management Stockholders.
OTHER ARRANGEMENTS
On October 21, 1998, each of William Sullivan, George Clairmont, Harrison
Augur and David Moore was granted a stipend in the amount of $15,000, which
amount is equal to the annual remuneration received by such non-executive
directors, by the Board of Directors of the Company in recognition of their
extraordinary efforts in connection with the negotiations with the Parent
concerning the Offer and the Merger Agreement.
Reference is hereby made to the information contained in Annex I attached
hereto under the heading "EXECUTIVE COMPENSATION -- Summary Compensation Table,"
"-- Options/SAR Grants Table," "-- Employment Agreements," and "-- Other" for a
description, among other things, of certain payments that will be payable to
certain executive officers of the Company upon the occurrence of a "Change in
Control" of the Company, and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"
and by such reference, such information is incorporated herein as though fully
set forth herein.
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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached hereto as Annex I is being furnished in
connection with the contemplated designation by the Purchaser, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board of Directors
of the Company other than at a meeting of the Company's stockholders, following
the acceptance for payment of, and payment by the Purchaser in accordance with
the Offer for, Shares pursuant to the Offer.
On October 27, 1998, Rachel Samet filed a purported class action suit in
Delaware Chancery Court against the Company and its officers and directors
seeking, among other things, a preliminary and permanent injunction against the
defendants proceeding with the proposed transaction and seeking, in the event
that the proposed transaction is consummated, among other things, rescission or
an award of rescissory and compensatory damages to the class. The Company
intends to vigorously defend against the plaintiff's claims.
The Parent originally filed a Pre-Merger Notification and Report Form with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice (the "Antitrust Division") in connection with the Offer of October 22,
1998. Pursuant to the provisions of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 ("HSR Act"), the purchase of Shares pursuant to the Offer is subject
to a 15-calendar day waiting period following the filing of the Pre-Merger
Notification and Report Form. The waiting period relating to the original filing
was scheduled to expire at 11:59 p.m. Eastern time, on November 6, 1998.
On November 5, 1998, in order to provide the Antitrust Division with
additional time to complete its review of the Parent's proposed acquisition of
the Company, the Parent withdrew its original Pre-Merger Notification and Report
Form. On November 6, 1998, the Parent submitted a new Pre-Merger Notification
and Report Form. As a result of the withdrawal and refiling, a new regulatory
waiting period under the HSR Act commenced on November 6, 1998 and will expire
at 11:59 p.m. Eastern time, on November 21, 1998, unless such waiting period is
earlier terminated by the Federal Trade Commission or the Antitrust Division or
extended by a request from the Federal Trade Commission or the Antitrust
Division for additional information or documentary material prior to the
expiration of the waiting period.
16
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 is true, complete
and correct.
LUMEN TECHNOLOGIES, INC.
By: /s/ Martin E. Franklin
-----------------------------------
Name: Martin E. Franklin
Title: Chairman of the Board
Dated: November 9, 1998
17
