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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
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STERIGENICS INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
STERIGENICS INTERNATIONAL, INC.
(NAME OF PERSON FILING STATEMENT)
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COMMON STOCK, PAR VALUE $0.001 PER SHARE
AND THE ASSOCIATED RIGHTS TO PURCHASE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK,
PAR VALUE $0.001 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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85915R 10 5
((CUSIP) NUMBER OF CLASS OF SECURITIES)
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JAMES F. CLOUSER
CHIEF EXECUTIVE OFFICER
STERIGENICS INTERNATIONAL, INC.
4020 CLIPPER COURT
FREMONT, CALIFORNIA 94538
(510) 770-9000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
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COPIES TO:
CARLA S. NEWELL, ESQ.
JAY K. HACHIGIAN, ESQ.
GUNDERSON DETTMER STOUGH VILLENEUVE
FRANKLIN & HACHIGIAN, LLP
155 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 321-2400
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9" or this "Statement") relates to an offer by IBA Acquisition
Corp., a Delaware corporation and an indirect wholly owned subsidiary of Ion
Beam Applications s.a., a Belgian corporation, to purchase all of the Shares (as
defined below) of SteriGenics International, Inc., a Delaware corporation.
Capitalized terms used herein and not otherwise defined herein shall have the
meaning assigned to them in the Offer to Purchase dated June 17, 1999, a copy of
which is filed as Exhibit (a)(1) hereto (the "Offer to Purchase").
ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is SteriGenics International, Inc., a
Delaware corporation (the "Company"). The address of the principal executive
office of the Company is 4020 Clipper Court, Fremont, California 94538. The
title of the class of equity securities to which this Statement relates is the
common stock, par value $0.001 per share (the "Common Stock") together with the
associated rights to purchase shares of Series A Junior Participating Preferred
Stock, par value $0.001 per share, (the "Rights," and together with the Common
Stock, the "Shares"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the tender offer (the "Offer") disclosed in the
Schedule 14D-1 dated June 17, 1999 (as amended or supplemented, the "Schedule
14D-1") filed with the Securities and Exchange Commission (the "Commission") by
Ion Beam Applications s.a., a Belgian corporation ("Parent" or "IBA"), and its
indirect wholly owned subsidiary, IBA Acquisition Corp., a Delaware corporation
("Purchaser") relating to an offer by Purchaser to purchase all outstanding
Shares at $27.00 per Share, net to the seller in cash, without interest (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase and the related letter of transmittal ("Letter of
Transmittal"), copies of which are filed as Exhibits (a)(1) and (a)(2) hereto,
respectively and are hereby incorporated by reference. The principal executive
offices of each of Purchaser and Parent are located at Chemin du Cyclotron, 3,
B-1348 Louvain-La-Neuve, Belgium.
The Offer is being made pursuant to a Merger Agreement dated as of June 10,
1999 (the "Merger Agreement") among the Company, IBA, Ion Beam Applications
G.P., a Delaware general partnership which owns all of the outstanding capital
stock of Purchaser and of which the Parent is the controlling general partner
("IBA GP") and Purchaser. A copy of the Merger Agreement is filed as Exhibit
(c)(1) to this Schedule 14D-9 and is hereby incorporated by reference. The
Merger Agreement provides that, among other things, as soon as practicable after
the purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Merger Agreement and in accordance with the relevant
provisions of the Delaware General Corporation Law ("DGCL"), Purchaser will be
merged with and into the Company (the "Merger"). Following consummation of the
Merger, the Company will continue as the surviving corporation (the "Surviving
Corporation") and will become a wholly owned subsidiary of IBA. At the effective
time of the Merger (the "Effective Time"), each Share issued and outstanding
immediately prior to the Effective Time, (other than (i) Shares held by any of
the Company's subsidiaries, (ii) Shares held by Parent, IBA GP, Purchaser or any
other subsidiary of Parent and (iii) Dissenting Shares (as defined below))
shall, by virtue of the Merger and without any action on the part of the
Purchaser, the Company or the holder thereof, be converted into and shall become
the right to receive the Offer Price. The Merger Agreement is summarized in Item
3 of this Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above. Unless the context
otherwise requires, references to the Company in this Schedule 14D-9 are to the
Company together with its subsidiaries, viewed as a single entity.
(b) Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and certain of the Company's directors, executive
officers and affiliates are described in the
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Information Statement of the Company attached to this Schedule 14D-9 as Annex A
(the "Information Statement"). The Information Statement is being furnished to
the Company's stockholders pursuant to Section 14(f) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14f-1 under the Exchange
Act in connection with Purchaser's right (after consummation of the Offer) to
designate persons to the Board of Directors of the Company other than at a
meeting of the stockholders of the Company. The Information Statement is herein
incorporated by reference.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company has previously entered into indemnification agreements with
each person who as of June 21, 1999 was a director of the Company. The
indemnification agreements generally provide (i) for indemnification against all
costs and expenses (including attorneys' fees) actually and reasonably incurred
in connection with the investigation, defense or appeal of any threatened,
pending or completed action, suit or proceeding related to the fact that such
indemnitee is or was serving the Company as a director, officer, employee, agent
or fiduciary, or by reason of anything done or not done by such indemnitee in
any such capacity and any and all judgments, fines, penalties and amounts paid
in settlement of any claim, unless it is determined that such indemnification is
not permitted under applicable law or as a result of certain culpable action by
such indemnitee and (ii) for the prompt advancement of expenses to an indemnitee
as well as the reimbursement by such indemnitee of any such advances to the
Company if it is determined that the indemnitee was not entitled to such
indemnification. Indemnitees' rights under the indemnification agreements are
not exclusive of any other rights they may have under the DGCL, the Company's
Bylaws or otherwise. A copy of the form of indemnification agreement has been
filed as Exhibit (c)(3) to this Schedule 14D-9 and is incorporated herein by
reference in its entirety.
Article XI of the Certificate of Incorporation of the Company, as amended
to date, limits the personal liability of directors of the Company and provides
for indemnification of the officers and directors of the Company, in each case
to the fullest extent permitted by the DGCL and other applicable law. A copy of
such Article XI has been filed as Exhibit (c)(4) to this Schedule 14D-9 and is
hereby incorporated by reference in its entirety. Article VI of the Bylaws of
the Company also provides for indemnification of officers and directors of the
Company. A copy of such Article VI has been filed as Exhibit (c)(5) to this
Schedule 14D-9 and is incorporated herein by reference in its entirety.
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 this Schedule 14D-9 and is hereby incorporated by reference in its entirety.
The Merger Agreement should be read in its entirety for a more complete
description of the matters summarized below. Capitalized terms not otherwise
defined in the following description of the Merger Agreement have the respective
meanings ascribed to them in the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by
Purchaser for the purchase of the Shares. Purchaser's obligation to accept the
Shares tendered to it shall be subject to the satisfaction of certain conditions
(see "Certain Conditions of the Offer"), as provided in the Merger Agreement.
Purchaser may waive any condition to the Offer, increase the Offer Price and may
make any other changes in the terms and conditions of the Offer, provided that,
unless previously approved by the Company in writing, Purchaser may not (i)
decrease the Offer Price, (ii) change the form of consideration payable in the
Offer, (iii) reduce the number of Shares required to satisfy the Minimum
Condition (as defined in the Merger Agreement), (iv) reduce the maximum number
of Shares to be purchased in the Offer, (v) add conditions to the Offer in
addition to those set forth in Article 7 of the Merger Agreement, (vi) otherwise
modify or amend those conditions in a manner that is materially adverse to the
holders of the Shares, or (vii) extend the Expiration Date beyond September 30,
1999 (except to comply with any rule, regulation or interpretation of the
Commission or to satisfy the conditions to the Offer).
The Merger Agreement provides that promptly after the close of the Offer
and the purchase of Shares pursuant thereto, Purchaser will be entitled to
designate a majority of the Board of Directors of the Company.
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The Company will, upon request from Purchaser, use its best efforts either to
increase the size of the Board of Directors (subject to the provisions of the
Company's Certificate of Incorporation) or to secure the resignation of such
number of Directors as is necessary to enable Purchaser's designees to be
elected to the Board of Directors and to use its best efforts to cause such
designees to be so elected and to constitute at all times after the expiration
date of the Offer (the "Tender Offer Purchase Time") a majority of the Board of
Directors. Notwithstanding the foregoing, the Company shall use its reasonable
efforts to encourage James F. Clouser and Frederick J. Reugsegger to remain
members of the Board of Directors until the Effective Time as defined below. The
Company shall promptly take all actions required pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder to enable Purchaser's
designees to be elected to the Board of Directors. Purchaser will supply the
Company any information with respect to its nominees, officers, directors and
affiliates required by Section 14(f) of the Exchange Act and Rule 14f-1
thereunder.
Following the appointment of the Purchaser's designees to the Board of
Directors and prior to the Effective Time, any amendment or termination of the
Merger Agreement, any extension of the performance or waiver of the obligations
or other acts of Parent, IBA GP or Purchaser, or waiver of the Company's rights
under the Merger Agreement, will require the concurrence of a majority of the
directors who were directors of the Company before the appointment of
Purchaser's designees.
The Merger. At the Effective Time and upon the terms and subject to the
conditions of the Merger Agreement and in accordance with the DGCL, Purchaser
shall be merged with and into the Company (the "Merger"). Following the Merger,
the Company shall continue as the Surviving Corporation and the separate
corporate existence of Purchaser shall cease. The closing of the Merger will
take place at a time (the "Closing Time") and on a date which shall be no later
than the second business day after satisfaction of all applicable conditions set
forth in the Merger Agreement, unless another time, date or place is agreed to
in writing. Subject to the terms and conditions set forth in the Merger
Agreement, a certificate of merger (the "Merger Certificate") shall be duly
executed and acknowledged by Purchaser and the Company and thereafter delivered
at the Closing Time to the Secretary of State of the State of Delaware, for
filing pursuant to the DGCL. The Merger shall become effective at such time as a
properly executed and certified copy of the Merger Certificate is duly accepted
for record by the Secretary of State of the State of Delaware for filing
pursuant to the DGCL, or such later time as Purchaser and the Company may agree
upon and set forth in the Merger Certificate (not exceeding 30 days after the
Merger Certificate is accepted for filing; the time the Merger becomes effective
being referred to herein as the "Effective Time"). Among other consequences of
the Merger, at the Effective Time all the properties, rights, privileges, powers
and franchises of the Company and Purchaser shall vest in the Surviving
Corporation and all debts, liabilities and duties of the Company and Purchaser
shall become the debts, liabilities and duties of the Surviving Corporation.
The Certificate of Incorporation of the Company in effect at the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
until amended in accordance with applicable law. The Bylaws of the Company in
effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until amended in accordance with applicable law. The directors and officers of
Purchaser at the Effective Time shall be the initial directors and officers of
the Surviving Corporation, each to hold office in accordance with the charter
and Bylaws of the Surviving Corporation until the next annual meeting of
stockholders and until each such director's successor is duly elected or
appointed and qualified, each such officer's successor is duly appointed, as
applicable.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than (i) Shares held by any of the Company's
subsidiaries, (ii) Shares held by Parent, IBA GP, Purchaser or any of their
affiliates and (iii) Dissenting Shares) shall, by virtue of the Merger, and
without any action on the part of Purchaser, the Company or the holder thereof,
be converted into and shall have the right to receive the Offer Price, without
interest (the "Cash Merger Consideration"). However, if between the date of the
Merger Agreement and the Effective Time, the Shares shall have been changed into
a different number of shares or a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, then the Cash Merger Consideration contemplated by the
Merger shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares. At the Effective Time, each Share, then owned by Parent, IBA GP,
Purchaser, the
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Company or any direct or indirect wholly owned subsidiary of Parent, IBA GP,
Purchaser or the Company shall, by virtue of the Merger, be canceled and retired
and will cease to exist and no payment shall be made with respect thereto. At
the Effective Time, each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one fully-paid and non-assessable share of common stock, par value
$0.001 per share, of the Surviving Corporation.
As of the Effective Time, Purchaser shall deposit with such agent or agents
as may be appointed for the benefit of the holders of Shares the amount of cash
necessary to pay the Cash Merger Consideration payable in exchange for
outstanding Shares.
At the Effective Time, each outstanding option to purchase Shares (a
"Company Stock Option," or collectively, "Company Stock Options") issued
pursuant to the Company's 1997 Equity Incentive Plan and its Second Amended and
Restated 1986 Stock Option Plan (each a "Company Option Plan" or collectively,
"Company Option Plans") shall vest in full and the Surviving Corporation shall
pay to the holder of each outstanding Company Stock Option an amount equal to
the excess, if any, of the Offer Price over the exercise price per Share of such
Company Stock Option, less the amount of taxes required to be withheld under
U.S. federal, state or local laws and regulations, multiplied by the number of
Shares subject to such Company Stock Option.
Representations and Warranties. The Merger Agreement contains certain
customary representations and warranties of the parties thereto. These include
representations and warranties of the Company with respect to corporate
existence and power, capitalization, subsidiaries, corporate authorization with
respect to the Merger Agreement, reports filed with the Commission, governmental
approvals, financial statements, litigation, Year 2000 compliance, amendment to
the Rights Agreement dated as of March 31, 1999 between the Company and U.S.
Stock Transfer Corporation, as Rights Agent (the "Rights Agreement"),
applicability of state takeover statutes and other matters. Purchaser and IBA
have also made certain representations and warranties with respect to corporate
existence and power, corporate authorization with respect to the Merger
Agreement, government consents and approvals, and the availability of funds to
finance the Offer and the Merger.
Interim Operations. The Company has agreed that, from the date of the
Merger Agreement until the Closing Time, unless the Parent has consented thereto
in writing, the Company shall, and shall cause each of its subsidiaries to (a)
conduct its business and operations only in the ordinary course of business
consistent with past practice; (b) use reasonable efforts to preserve intact the
business, organization, goodwill, rights, licenses, permits and franchises of
the Company and its subsidiaries and maintain their existing relationships with
customers, suppliers and other persons having business dealings with them, the
loss of any of which would be reasonably likely to result in a material adverse
effect on the Company; (c) use reasonable efforts to keep in full force and
effect adequate insurance coverage and maintain and keep its properties and
assets in good repair, working order and condition, normal wear and tear
excepted; (d) not amend or modify its respective charter or certificate of
incorporation, bylaws, or other charter or organization documents; (e) not
authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree
or commit to issue, sell, grant, deliver, pledge or encumber any shares of any
class or series of capital stock of the Company or any of its subsidiaries or
any other equity or voting security or equity or voting interest in the Company
or any of its subsidiaries, any securities convertible into or exercisable or
exchangeable for any such shares, securities or interests, or any options,
warrants, calls, commitments, subscriptions or rights to purchase or acquire any
such shares, securities or interests (other than issuances of Shares upon
exercise of Company Stock Options as then in effect granted to directors,
officers, employees and consultants of the Company prior to the date of the
Merger Agreement); (f) not (i) split, combine or reclassify any shares of its
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of its stock, (ii) solely
in the case of the Company, declare, set aside or pay any dividends on, or make
other distributions in respect of, any of the Company's stock, or (iii)
repurchase, redeem or otherwise acquire, or agree or commit to repurchase,
redeem or otherwise acquire, any shares of stock or other equity or debt
securities or equity interests of the Company or any of its subsidiaries; (g)
not amend or otherwise modify the terms of any Company Stock Options or the
Company Option Plans, the effect of which would be to make such terms more
favorable to the holders thereof or persons eligible for participation therein;
(h) other than regularly scheduled
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seniority increases in the ordinary course of business consistent with past
practice, not increase the compensation payable or to become payable to any
directors, officers or employees of the Company or any of its subsidiaries, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with any director or officer of the Company or any of its
subsidiaries, or establish, adopt, enter into or amend in any material respect
or take action to accelerate any material rights or benefits under any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer or employee of the
Company or any of its subsidiaries; (i) not acquire or agree to acquire
(including, without limitation, by merger, consolidation, or acquisition of
stock, equity securities or interests, or assets) any corporation, partnership,
joint venture, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets of any other person outside the
ordinary course of business consistent with past practice or any interest in any
real properties (whether or not in the ordinary course of business); (j) not
incur, assume or guarantee any indebtedness for borrowed money (including
draw-downs on letters or lines of credit) or issue or sell any notes, bonds,
debentures, debt instruments, evidences of indebtedness or other debt securities
of the Company or any of its subsidiaries or any options, warrants or rights to
purchase or acquire any of the same, except for (i) renewals of existing bonds
and letters of credit in the ordinary course of business not to exceed
$1,000,000 in the aggregate and (ii) advances, loans or other indebtedness in
the ordinary course of business consistent with past practice in an aggregate
amount not to exceed $1,000,000; (k) not sell, lease, license, encumber or
otherwise dispose of, or agree to sell, lease, license, encumber or otherwise
dispose of, any material properties or assets of the Company and its
subsidiaries taken as a whole; (l) not authorize or make any capital
expenditures (including by lease) in excess of $1,000,000 in the aggregate for
the Company and all of its subsidiaries; (m) not make any material change in any
of its accounting or financial reporting (including tax accounting and
reporting) methods, principles or practices, except as may be required by U.S.
GAAP or applicable tax laws; (n) not make any material tax election or settle or
compromise any material United States or foreign tax liability; (o) except in
the ordinary course of business consistent with past practice, not amend, modify
or terminate certain specified contracts or waive, release or assign any
material rights or claims thereunder; (p) not adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries; and (q) except as to subsections (a), (b) and (c) above, not agree
or commit in writing or otherwise to do any of the foregoing.
Stockholders Meeting. The Company has agreed that, if required for the
Merger under the DGCL, it shall, through its Board of Directors, duly call a
meeting of its stockholders for the purpose of considering and approving the
Merger Agreement, the Merger and all other transactions contemplated therein.
Under the DGCL, if, after consummation of the Offer, Purchaser owns at least 90%
of the Shares then outstanding, Purchaser will be able to cause the Merger to
occur without a vote of the Company's stockholders. If, however, after
consummation of the Offer, Purchaser owns less than 90% of the then outstanding
Shares, a vote of the Company's stockholders will be required under the DGCL to
approve the Merger. Assuming no additional Shares (or warrants, options or
rights exercisable for, or securities convertible into, Shares) have been issued
(other than Shares issued pursuant to such options and rights referred to
above), if Purchaser were to acquire a majority of the Shares outstanding on a
diluted basis pursuant to the Offer (including the Shares that, pursuant to the
Stockholders' Agreement are required to be tendered in response to the Offer),
the Minimum Condition would be satisfied and the Purchaser would have the votes
required to effect the Merger without the vote of any other stockholders
following the Tender Offer Purchase Time and the Company will mail to its
stockholders an information proxy conforming to the requirements of Schedule 14A
under the Exchange Act, regarding a special meeting of the Company's
stockholders to be held to consider approval of the Merger. As a result of
certain timing requirements under federal laws and the DGCL, the special meeting
of the stockholders would not take place until a number of weeks following the
Tender Offer Purchase Time.
Other Potential Acquirers. Pursuant to the Merger Agreement, the Company
has agreed that from and after the date of the Merger Agreement until the
earlier of the Effective Time or termination of the Merger Agreement in
accordance with its terms, the Company and its subsidiaries shall not, and will
instruct their
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respective directors, officers, employees, representatives, investment bankers,
agents and affiliates not to, directly or indirectly, solicit, or encourage
submission of, any inquiries, proposals or offers by any person, entity or group
(other than IBA and its affiliates, agents and representatives), or participate
in any discussions or negotiations with, or disclose any non-public information
concerning the Company to, any person, entity or group (other than IBA and its
affiliates, agents and representatives), in connection with any "Acquisition
Proposal" with respect to the Company. For purposes of the Merger Agreement, an
"Acquisition Proposal" with respect to an entity means any proposal or offer
relating to (i) any merger, consolidation, sale of substantial assets or similar
transactions involving the entity or any subsidiaries of the entity (other than
sales of assets or inventory in the ordinary course of business or as permitted
under the terms of the Merger Agreement); (ii) the acquisition by any person of
beneficial ownership or a right to acquire beneficial ownership of, or the
formation of any "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) which beneficially owns, or has the right
to acquire beneficial ownership of, 10% or more of the then outstanding shares
of capital stock of the entity (except for acquisitions for passive investment
purposes only in circumstances where the person or group qualifies for and files
a Scheduled 13G with respect thereto); (iii) the adoption by the entity of a
plan of liquidation or the declaration or payment of an extraordinary dividend;
(iv) the repurchase by the entity of more than 20% of its outstanding shares of
voting stock; (v) the acquisition by the entity of direct or indirect ownership
of a business whose annual revenue, net income or assets is greater than 20% of
the entity; or (vi) 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. The
Company has agreed to notify IBA as promptly as practicable if any inquiry or
proposal is made or any information or access is requested in connection with an
Acquisition Proposal or potential Acquisition Proposal and as promptly as
practicable to notify IBA of the terms and conditions of any such Acquisition
Proposal.
In addition, subject to certain other provisions of the Merger Agreement,
from and after the date of the Merger Agreement until the earlier of the
Effective Time and termination of the Merger Agreement by its terms, the Company
and its subsidiaries will not, and will instruct their respective directors,
officers, employees, representatives, investment bankers, agents and affiliates
not to directly or indirectly, make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Proposal made by
any person, entity or group (other than Parent or Purchaser); provided, however,
that nothing in the Merger Agreement shall prohibit the Company's Board of
Directors from taking and disclosing to the Company's stockholders a position
with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act. Except as allowed under this paragraph, the Company's
Board of Directors will not withdraw or modify in a manner adverse to Parent or
Purchaser its recommendation of the transactions contemplated hereby or approve
or recommend any Acquisition Proposal. Notwithstanding the provisions above,
prior to consummation of the Offer, the Company may, to the extent the Board of
Directors of the Company determines, in good faith, after consultation with
outside legal counsel, that the Board of Directors' fiduciary duties under
applicable law require it to do so, participate in discussions or negotiations
with, and furnish information to, any person, entity or group after such person,
entity or group has delivered to the Company in writing, an unsolicited bona
fide Acquisition Proposal which the Board of Directors of the Company in its
good faith reasonable judgment determines, after consultation with its
independent financial advisors, would result in a transaction more favorable
than the Offer and the Merger to the stockholders of the Company from a
financial point of view and for which financing, to the extent required, is then
committed or which, in the good faith reasonable judgment of the Board of
Directors of the Company (based upon the advice of independent financial
advisors) is reasonably capable of being financed by such person, entity or
group and which is likely to be consummated (a "Superior Proposal").
Notwithstanding anything to the contrary in the Merger Agreement, the Company
will not provide any non-public information to a third party unless: (x) the
Company provides such non-public information pursuant to a non-disclosure
agreement with terms regarding the protection of confidential information at
least as restrictive as such terms in the confidentiality agreement with
Purchaser and Parent; and (y) such non-public information has been previously
delivered to Parent.
In the event the Company receives a Superior Proposal, nothing contained in
the Merger Agreement prevents the Board of Directors of the Company from
recommending such Superior Proposal to the Company's stockholders, if the Board
of Directors determines, in good faith, after consultation with outside
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legal counsel, that such action is required by its fiduciary duties under
applicable law, provided, however, that the Company shall not recommend to its
stockholders a Superior Proposal for a period of not less than 72 hours after
Parent's receipt of a copy of such Superior Proposal (or a description of terms
and conditions thereof, if not in writing).
Dissenting Shares. In the event that dissenters' rights are available in
connection with the Merger pursuant to Section 262 of the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and that are held
by stockholders who did not vote in favor of the Merger and who comply with all
of the relevant provisions of Section 262 of the DGCL (the "Dissenting Shares")
shall not be converted into or be exchangeable for the right to receive the Cash
Merger Consideration, but instead shall be converted into the right to receive
such consideration as may be determined to be due to such stockholders pursuant
to Section 262 of the DGCL, unless such holders shall have failed to perfect or
shall have effectively withdrawn or lost their rights to appraisal under the
DGCL. If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such holder's Shares shall thereupon be deemed to
have been converted into and to have become exchangeable for the right to
receive, as of the Effective Time, the Cash Merger Consideration without any
interest thereon. The Company has agreed to give Parent prompt notice of any
written demands for appraisal of Shares received by the Company and the
opportunity to participate in all negotiations and proceedings with respect to
any such demands.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SECTION 262 OF THE
DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS ARE CONDITIONED ON
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
Conditions to the Merger. The respective obligations of the Company, IBA
and Purchaser to effect the Merger are subject to the satisfaction at or prior
to the Closing Time of the following conditions: (a) the Merger Agreement, the
Merger and the other transactions contemplated thereby shall have been approved
by all necessary corporate action of the Company, including, if necessary,
adoption by vote of the stockholders of the Company; (b) no governmental entity
or court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (and if temporary or preliminary, not vacated within
five business days of its entry) which is in effect and which (1) makes the
payment of the Cash Merger Consideration illegal or otherwise prohibits or
restricts consummation of the Merger or any of the other applicable transactions
contemplated thereby, or (2) imposes material limitations on the ability of
Parent, IBA GP or Purchaser to acquire or hold or to exercise any rights of
ownership of the Surviving Corporation, or effectively manage or control the
Surviving Corporation and its business, assets and properties; (c) any waiting
period applicable to the Merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") shall have terminated or
expired and any other governmental or regulatory notices or approvals required
with respect to the transactions contemplated hereby shall have been either
filed or received; and (d) Purchaser shall have purchased Shares pursuant to the
Offer.
Termination. The Merger Agreement may be terminated, at any time prior to
the Effective Time, whether before or after approval by the stockholders of the
Company: (a) by mutual written agreement of the Boards of Directors of IBA and
the Company; (b) by either IBA or the Company: (i) if the Offer shall be
terminated or expire without any Shares having been purchased pursuant to the
Offer; provided, however, that a party shall not be entitled to terminate the
Merger Agreement pursuant to this provision if it is in material breach of its
representations and warranties, covenants or other obligations under the Merger
Agreement; and provided, further, however, that if the Offer is not consummated
due to a failure to obtain clearance under the HSR Act, Parent may not terminate
the Merger Agreement until December 31, 1999 and the Company may not terminate
the Merger Agreement until April 1, 2000; (ii) if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such order,
decree, ruling or other action shall have become final and non-appealable; (c)
by Parent: (i) if the Board of Directors
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of the Company or any committee thereof shall have approved, or recommended that
stockholders of the Company accept or approve, an Acquisition Proposal by a
third party, or shall have resolved to do any of the foregoing; (ii) if the
Board of Directors of the Company or any committee thereof shall have withdrawn
or modified its approval of, or recommendation that the stockholders of the
Company accept or approve (as the case may be), the Offer, the Merger Agreement
and the Merger, or shall have resolved to do any of the foregoing; (iii) if the
Company shall have failed to include in this Schedule 14D-9 the recommendation
of the Board of Directors that the stockholders of the Company accept the Offer;
(iv) prior to the purchase of the Shares pursuant to the Offer, if the Company
is in material breach of any of its covenants or obligations under the Merger
Agreement, or any representation or warranty of the Company contained in the
Merger Agreement shall have been incorrect, in any material respect, when made;
(v) prior to the purchase of Shares pursuant to the Offer, in the event that the
conditions to the Offer shall not be satisfied, provided that Parent may not
terminate the Merger Agreement due to a failure to obtain clearance under the
HSR Act until December 31, 1999; or (vi) after purchase of the Shares pursuant
to the Offer, if the Company is in violation or breach of Section 1.3 of the
Merger Agreement; (d) by the Company: (i) if the Offer shall not have been
commenced in accordance with the Merger Agreement, or Parent or Purchaser shall
have failed to purchase validly tendered Shares in violation of the terms of the
Offer within 10 business days after the expiration of the Offer; provided,
however, that the Company shall not terminate the Merger Agreement if it is in
material breach of its representations and warranties, covenants, or other
obligations under the Merger Agreement; (ii) if the Board of Directors of the
Company has resolved to, and in fact does, recommend to the Company's
stockholders that they accept a Superior Proposal, provided all provisions of
the Merger Agreement have been complied with and the Break-Up Fee (as defined
below) has been paid to Parent; (iii) prior to the purchase of Shares pursuant
to the Offer, if Parent or Purchaser is in material breach of any of its
covenants or obligations under the Merger Agreement, or any representation or
warranty of Parent or Purchaser contained in the Merger Agreement shall have
been incorrect in any material respect, when made; or (iv) at any time after
March 31, 2000 if the Offer has not been consummated due to a failure to obtain
clearance under the HSR Act; provided, however, that the Company shall not be
entitled to terminate the Merger Agreement if it is in material breach of its
representations and warranties, covenants and other obligations under the Merger
Agreement.
Amendment of the Merger Agreement. The Merger Agreement may be amended by
the Company, Purchaser, IBA and IBA GP by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that (i) any such amendment shall be in writing signed by all
of the parties, (ii) any such waiver, amendment or supplement by the Company
shall be effective as against the Company only if approved by a majority of
those directors of the Company then in office who were directors of the Company
as of June 10, 1999, or are directors (other than directors designated by
Purchaser in accordance with the Merger Agreement) designated by such persons to
fill any vacancy, and (iii) after adoption of the Merger Agreement and the
Merger by the stockholders of the Company, no amendment that reduces the Merger
Consideration or changes the form thereof or changes any other terms and
conditions of the Merger Agreement can be made without the further approval of
the stockholders of the Company if the changes, alone or in the aggregate, would
materially adversely affect the stockholders of the Company.
Fees and Expenses. In the event of the termination of the Merger Agreement,
the Merger Agreement provides that it will forthwith become void and there will
be no liability thereunder on the part of any party thereto except under the
provisions of the Merger Agreement related to fees and expenses described below
and under certain other provisions of the Merger Agreement which survive
termination.
Except as otherwise provided in the Merger Agreement and whether or not the
transactions contemplated by the Offer and the Merger Agreement are consummated,
all costs and expenses incurred in connection with the transactions contemplated
by the Offer and the Merger Agreement shall be paid by the party incurring such
expenses.
The Company shall pay to Parent, an amount equal to $7,500,000 (the
"Break-Up Fee") if any of the following shall occur: (i) the Board of Directors
of the Company or any committee thereof shall have approved, or recommended that
stockholders of the Company accept or approve, an Acquisition Proposal by a
third party, or shall have resolved to do any of the foregoing; (ii) the Board
of Directors of the Company or
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<PAGE> 10
any committee thereof shall have withdrawn or modified its approval of, or
recommendation that the stockholders of the Company accept or approve (as the
case may be), the Offer, the Merger Agreement and the Merger, or shall have
resolved to do any of the foregoing; or (iii) the Company shall have failed to
include in this Schedule 14D-9 the recommendation of the Board of Directors of
the Company that the stockholders of the Company accept that Offer. The Break-Up
Fee shall be payable within 30 days of such event.
Parent shall pay to the Company the sum of $8,000,000 if the Offer has not
been consummated, and (i) Parent terminates the Merger Agreement during the
period from December 31, 1999 through February 15, 2000 due to a failure to
obtain clearance under the HSR Act and (ii) Parent shall have refused to consent
to any divestiture by the Company required for clearance under the HSR Act.
Parent shall pay to the Company the sum of $15,000,000 if the Offer has not
been consummated, and (i) Parent terminates the Merger Agreement at any time
after February 15, 2000 due to a failure to obtain clearance under the HSR Act
and (ii) Parent shall have refused to consent to any divestiture by the Company
required for clearance under the HSR Act.
Parent shall pay to the Company the sum of $15,000,000 if the Company
terminates the Merger Agreement pursuant to Section 9.1(d)(iv) of the Merger
Agreement and Parent shall have refused to consent to any divestiture by the
Company required for clearance under the HSR Act.
CERTAIN CONDITIONS OF THE OFFER
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition. Furthermore, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Commission, including
Rule 14e-l(c) under the Exchange Act relating to Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer, pay for, and may delay the acceptance for payment of, or subject to the
restrictions referred to above, the payment for, any tendered Shares, and may
amend the Offer consistent with the terms of the Merger Agreement, including
extending the deadline for tendering Shares, or terminate the Offer, if any of
the following events shall occur:
(A) from the date of the Merger Agreement until the Tender Offer
Purchase Time, there shall have occurred any change, event, occurrence or
circumstance which, individually or in the aggregate, has a Material Change
(as such term is defined in the Merger Agreement) on the Company;
(B) from the date of the Merger Agreement until the Tender Offer
Purchase Time, any governmental entity or court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, executive order, decree, injunction or other order (and
if temporary or preliminary, not vacated within five business days of its
entry), except with regard to HSR Act approval which is in effect at the
Tender Offer Purchase Time and which (1) makes the acceptance for payment
of, or the payment for, some or all of the Shares illegal or otherwise
prohibits or restricts consummation of the Offer, the Merger or any of the
other transactions contemplated thereby, (2) imposes material limitations
on the ability of Parent, IBA GP or Purchaser to acquire or hold or to
exercise any rights of ownership of the Shares, or effectively to manage or
control the Company and its business, assets and properties or (3) would
result in a Material Change to the Company; provided, however, that the
parties shall use reasonable efforts to cause any such decree, judgment or
other order to be vacated or lifted as soon as practicable;
(C) the representations and warranties of the Company set forth in the
Merger Agreement shall not (i) have been true and correct in one or more
material respects on the date hereof or (ii) except for certain
representations and warranties designated in Section 7.1 of the Merger
Agreement, be true and correct in one or more material respects as of the
scheduled Expiration Date (as such date may be extended) of the Offer as
though made on or as of such date or the Company shall have breached or
failed in any respect to perform or comply with any material obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it except, in each case with respect to clause (ii), (1)
for changes specifically permitted by the Merger Agreement and (2) (x) for
those representations and warranties that address matters only as of a
particular date which are true and correct
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<PAGE> 11
as of such date or (y) where the failure of representations and warranties
(without regard to materiality qualifications therein contained) to be true
and correct, or the performance or compliance with such obligations,
agreements or covenants, would not, individually or in the aggregate result
in a Material Change to the Company;
(D) from the date of the Merger Agreement until the Tender Offer
Purchase Time, the Merger Agreement shall have been terminated in
accordance with its terms;
(E) from the date of the Merger Agreement until the Tender Offer
Purchase Time, the Board of Directors of the Company or any committee
thereof shall have (1) withdrawn or modified (including without limitation,
by amendment of the Company's Schedule 14D-9) in a manner adverse to Parent
or Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, (2) approved or recommended any Acquisition Proposal by a
third party other than the Offer and the Merger, (3) resolved to do any of
the foregoing, or (4) upon a request to reaffirm the Company's approval or
recommendation of the Offer, the Merger Agreement or the Merger, the Board
of Directors of the Company shall fail to do so within two business days
after such request is made;
(F) from the date of the Merger Agreement until the Tender Offer
Purchase Time, any of the consents, approvals, authorizations, orders or
permits required to be obtained by the Company, Parent, IBA GP or
Purchaser, or their respective subsidiaries in connection with the Offer or
the Merger from, or filings or registrations required to be made by any of
the same prior to the Tender Offer Purchase Time with, any governmental
entity in connection with the execution, delivery and performance of the
Merger Agreement (including without limitation the termination or
expiration of any applicable waiting period or the receipt of any required
clearance under the HSR Act) shall not have been obtained or made or shall
have been obtained or made subject to conditions or requirements, which (A)
make the acceptance for payment of, or the payment for the Shares illegal
or otherwise prohibits or restricts the consummation of the Offer or the
Merger or (B) have a Parent Material Adverse Effect (as defined in the
Merger Agreement) or result in a Material Change to the Company or (C)
impose material limitations on the ability of Parent, IBA GP or Purchaser
effectively to manage or control the Company; or
(G) from the date of the Merger Agreement until the Tender Offer
Purchase Time, in the case of HSR Act approval, any governmental entity or
court of competent jurisdiction shall have entered a final non-appealable
order enjoining consummation of the Merger.
(H) from the date of the Merger Agreement until the Tender Offer
Purchase Time, there shall have occurred (1) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or in Belgium or (2) the commencement of a war or armed hostilities
involving the United States or Belgium and resulting in a Material Change
to the Company or materially adversely affecting (or materially delaying)
the consummation of the Offer.
The foregoing conditions (the "Offer Conditions") are for the sole benefit of
Purchaser and may be waived by Purchaser, in whole or in part at any time and
from time to time in the sole discretion of Purchaser. The failure by Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
THE STOCKHOLDERS' AGREEMENT
On June 10, 1999, the Stockholders' Agreement was executed by and among
Parent, IBA GP, Purchaser and the Selling Stockholders (as defined therein). The
seven Selling Stockholders hold an aggregate of 2,494,312 Shares (27.1% of the
outstanding Shares on a diluted basis as of June 21, 1999). The following
summary of the material terms of the Stockholders' Agreement is qualified in its
entirety by reference to the copy of the Stockholders' Agreement filed as
Exhibit (c)(2) to this Schedule 14D-9 and such Stockholders' Agreement is hereby
incorporated by reference in its entirety.
Voting of Shares. Each Selling Stockholder has agreed that during the
period commencing as of the date of the Stockholders' Agreement, and continuing
until the Closing Time or 45 days after the termination
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of the Merger Agreement in accordance with its terms, whichever first occurs,
each Selling Stockholder shall vote (or cause to be voted) the Shares held of
record or beneficially owned by each Selling Stockholder, whether owned on June
10, 1999, or thereafter, at any meeting of the holders of the Shares (i) in
favor of approval of the Merger Agreement, all transactions contemplated thereby
and any actions required in furtherance of the Merger Agreement or the
Stockholders' Agreement (including election of such directors of the Company as
Parent is entitled to designate pursuant to the Merger Agreement); (ii) against
any action or agreement that is intended, or could reasonably be expected, to
impede, interfere with, or prevent the Offer or the Merger or result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company or any of its subsidiaries under the
Merger Agreement or the Stockholders' Agreement; and (iii) except as
specifically requested in writing in advance by IBA, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement and the Stockholders' Agreement): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its subsidiaries or affiliates; (B) a sale,
lease, transfer or disposition by the Company or any of its subsidiaries of any
assets outside the ordinary course of business or any assets which in the
aggregate are material to the Company and its subsidiaries taken as a whole, or
a reorganization, recapitalization, dissolution or liquidation of the Company or
any of its subsidiaries or affiliates; (C) (i) any change in the present
capitalization of the Company or any amendment of the Company's charter or
Bylaws; (ii) any other material change in the Company's or any of its
subsidiaries' corporate structure or business; or (iii) any other action that,
in the case of each of the matters referred to in clauses (C) (i), (ii) or
(iii), is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone or materially adversely affect the Offer, the Merger or the
transactions contemplated by the Stockholders' Agreement or the Merger
Agreement. None of the Selling Stockholders shall enter into any agreement or
understanding with any person the effect of which would be inconsistent with or
violative of the provisions and agreements contained in the Stockholders'
Agreement.
Irrevocable Proxy. Effective from June 10, 1999, each Selling Stockholder
has agreed to appoint certain officers of Parent, and their respective
successors and designees, as true, lawful and irrevocable (until the Closing
Time or 45 days after the termination of the Merger Agreement, whichever is
earlier) proxies and attorneys-in-fact (with full power of substitution) to vote
their Shares, or to grant a consent or approval in respect of such Shares. Each
Selling Stockholder granted to Parent and its respective successors and
designees an irrevocable proxy coupled with an interest.
Other Covenants, Representations and Warranties. The Stockholders'
Agreement contains certain customary representations and warranties of the
parties thereto, including, without limitation, representations and warranties
by the Selling Stockholders as to ownership of their Shares, power and
authority.
Tender of Shares, Restrictions on Transfers, Proxies and
Non-Interference. Each Selling Stockholder has agreed to tender his or its
Shares in the Offer and to not withdraw any Shares therefrom unless and until
the Merger Agreement is terminated in accordance with its terms without such
Shares being purchased by Purchaser pursuant to the Offer. Each of the Selling
Stockholders has agreed not, directly or indirectly, to: (i) tender his or its
Shares in any other tender offer or exchange offer for the Shares; (ii) except
as contemplated by the Stockholders' Agreement or the Merger Agreement,
otherwise offer for sale, sell, transfer, tender, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement or
understanding with respect to any interest therein; (iii) grant any proxies or
powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iv) take any action that would
make any representation or warranty of any such Selling Stockholder contained
herein untrue or incorrect or have the effect of preventing or disabling such
Selling Stockholder from performing such Selling Stockholder's obligations under
the Stockholders' Agreement.
Other Potential Acquirers. Pursuant to the Stockholders' Agreement, each
Selling Stockholder shall (i) cease existing discussions or negotiations, if
any, with any parties conducted on or before June 10, 1999, with respect to any
acquisition of all or any material portion of the assets of, or any equity
interest in, the Company or any of its subsidiaries or any business combination
with the Company or any of its subsidiaries, in his or her capacity as a
stockholder of the Company; and (ii) from and after June 10, 1999, until the
termination of the Merger Agreement, not, in such capacity, directly or
indirectly, initiate, solicit or knowingly
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encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
such transaction or acquisition, or agree to endorse any such transaction or
acquisition, or authorize or permit any of the Selling Stockholders' agents to
do so, and each Selling Stockholder shall promptly notify Parent of any proposal
and shall provide a copy of such written proposal and a summary of any oral
proposal to Parent immediately after receipt thereof (and shall specify the
material terms and conditions of such proposal and identify the person making
such proposal) and thereafter keep Parent advised of any development with
respect thereto.
Option. Pursuant to the Stockholders' Agreement, each Selling Stockholder
has granted to Parent an irrevocable option (the "Option") to purchase all
Shares held of record or beneficially owned by such Selling Stockholder at the
Offer Price or such higher price as may be offered by Purchaser in the Offer,
and Parent may exercise the Option, in whole or in part, at any time and from
time to time, following the occurrence of a Purchase Event (as defined below);
provided that any part thereof not exercised shall expire upon the earliest to
occur of (i) the Closing Time, (ii) 45 days after a Purchase Event; or (iii) 45
days after the termination of the Merger Agreement; provided that the expiration
date shall not extend beyond March 31, 2000. 'Purchase Event' means any of the
following events: (i) when any person or group other than IBA, Purchaser or an
affiliate thereof acquires the beneficial ownership of more than 20% of the
outstanding capital stock of the Company, or right to acquire such capital stock
of the Company; (ii) when the Company has entered into agreement or approved or
recommended any proposal which provides for the acquisition of 20% or more of
the outstanding capital stock of the Company or substantially all of the assets
of the Company by any person or group other than IBA, Purchaser or an affiliate
thereof; (iii) (A) the failure of the Company's stockholders to approve the
Merger Agreement or the transactions contemplated thereby at a meeting called to
consider such Merger Agreement, if such meeting shall have been preceded by (x)
the public announcement by any Person or group (other than Parent, Acquisition
or an affiliate of any of them) of an offer or proposal to acquire, merge or
consolidate with the Company, or (y) the Board of Directors of the Company's
publicly withdrawing or modifying, or publicly announcing its intent to withdraw
or modify, its recommendation that the stockholders of the Company approve the
transactions contemplated by the Merger Agreement or (B) the acceptance by the
Company's Board of Directors of, or the public recommendation by the Company's
Board of Directors that the stockholders of the Company accept, an offer or
proposal from any Person or group (other than Parent, Acquisition or an
affiliate of any of them), to acquire 20% or more of the outstanding capital
stock of the Company or for a merger or consolidation or any similar transaction
involving the Company; (iv) the making of an Acquisition Proposal as described
in Section 5.3 of the Merger Agreement entitling IBA or the Company to terminate
the Merger Agreement pursuant to Section 9.1 of the Merger Agreement; or (v) any
breach by the Selling Stockholders of the Stockholders' Agreement.
Termination. Except as otherwise provided therein, the Stockholders'
Agreement shall terminate upon the earlier of (A) termination of the Merger
Agreement in accordance with its terms, or (B) the Effective Time.
CERTAIN TRANSACTIONS BETWEEN IBA AND THE COMPANY
In December 1998, the Company purchased irradiation equipment from Parent.
Except as set forth in this Schedule 14D-9, since April 1, 1996, none of
Purchaser, Parent or, to the best of their knowledge, any persons affiliated
with Parent or Purchaser, has had any business relationships or transactions
with the Company or any of its executive officers, directors or affiliates that
are required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Schedule 14D-9, since April
1, 1996, there have been no contacts, negotiations or transactions between any
of Parent, the Purchaser or, to the best of their knowledge, any persons
affiliated with Parent or Purchaser, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets.
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EMPLOYMENT AGREEMENTS, SEVERANCE AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
James F. Clouser entered into an employment agreement with the Company in
June 1999 (the "Employment Agreement"). The following summary of the material
terms of the Employment Agreement is qualified in its entirety by reference to
the copy of the Employment Agreement filed as Exhibit (c)(6) to this Schedule
14D-9 and is hereby incorporated by reference in its entirety. The Employment
Agreement by its terms, is to take effect the day immediately prior to the
Merger and in the event the Merger Agreement is terminated, the Employment
Agreement shall be null and void. The term of the Employment Agreement is four
years (the "Employment Period"). Under the terms of the Employment Agreement,
Mr. Clouser will be paid an annual base salary of $500,000. If Mr. Clouser is
terminated as a result of disability or death, a lump sum cash payment equal to
the base salary payable for the remainder of the Employment Period will be paid
to Mr. Clouser or his spouse or estate, respectively. If Mr. Clouser is
constructively discharged for any reason other than cause or he quits within 60
days after the first anniversary of the Merger, Mr. Clouser will receive a lump
sum cash payment equal to the base salary payable for the remainder of the
Employment Period and continue to receive employee benefits for the remainder of
the Employment Period. Mr. Clouser cannot compete with the business of the
Company during the Employment Period, regardless of whether he remains employed
with the Company. To the extent that any payments or distributions made to Mr.
Clouser with respect to the Merger result in an excise tax for him under Section
280G of the Internal Revenue Code, Mr. Clouser will receive additional payments
from the Company to put him in the same after-tax position as if such excise
taxes and any related taxes did not apply.
In June of 1999, each of D. Patterson Adams, David E. Meyer, Eric W. Beers,
Lisa C. Foster and Carole-Lynn S. Glass entered into a severance agreement with
the Company (the "Two Year Severance Agreements"). The following summary of the
material terms of the Two Year Severance Agreements is qualified in its entirety
by reference to the form of Two Year Severance Agreement filed as Exhibit (c)(7)
to this Schedule 14D-9 and hereby incorporated by reference in its entirety. The
Two Year Severance Agreement provides that if one of these officers is
terminated without cause or resigns for good reason within 12 months of a change
in control, such officer will receive (i) a severance payment equal to two years
of such officer's most recent base salary, and (ii) to the extent that any of
their options are not vested, such options will become fully vested and
exercisable.
In June of 1999, each of Eugene W. Davis and Donald A. Currie entered into
a severance agreement with the Company (the "One Year Severance Agreements").
The following summary of the material terms of the One Year Severance Agreement
is qualified in is entirety by reference to the form of One Year Severance
Agreement filed as Exhibit (c)(8) to this Schedule 14D-9 and hereby incorporated
by reference in its entirety. The One Year Severance Agreement provides that if
one of these officers is terminated without cause or resigns for good reason
within 12 months of a change in control, such officer will receive (i) a
severance payment equal to one year of such officer's most recent base salary,
and (ii) to the extent any of such officer's options are not vested, such
options will become fully vested and exercisable.
The vesting of the options granted under the 1997 Equity Incentive Plan
accelerates entirely in the event of a change in control. The vesting of the
options granted under the Company's 1997 Stock Plan accelerates entirely in the
event of a change in control if the options are not assumed or substituted with
options having substantially the same terms by the successor corporation or its
parent. The Board of Directors or the Compensation Committee has the discretion
to accelerate the vesting of options granted under the Second Amended and
Restated 1986 Stock Option Plan in the event of a change in control. The Named
Officers have been granted options under the three previously described plans.
Pursuant to the Merger Agreement at the Effective Time, each outstanding Company
Stock Option issued pursuant to Company Option Plans shall vest in full and the
Surviving Corporation shall pay to the holder of each outstanding Company Stock
Option an amount equal to the excess, if any, of the Offer Price over the
exercise price per Share of such Company Stock Option, less the amount of taxes
required to be withheld under U.S. federal, state or local laws and regulations,
multiplied by the number of Shares subject to such Company Stock Option.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has approved the Offer and the Merger
and determined that the terms of the Offer and the Merger are fair to, and in
the best interests of, the stockholders of the Company and recommends that
stockholders of the Company accept the Offer and tender their Shares.
As set forth in the Offer to Purchase the Merger Agreement and the Letter
of Transmittal (the "Offer Documents"), the Purchaser will purchase shares
tendered prior to the close of the Offer if the Conditions to the Offer have
been satisfied (or waived). Stockholders considering not tendering their shares
in order to wait for the Merger should note that if the Minimum Condition is not
satisfied or any of the other conditions to the Offer are not satisfied,
Purchaser is not obligated to purchase any shares, and can terminate the Offer
and the Merger Agreement and not proceed with the Merger. Under the DGCL, the
approval of the Board and the affirmative vote of the holders of a majority of
the outstanding Shares are required to approve the Merger. Accordingly, if the
Conditions to the Offer are satisfied, Purchaser, together with Parent, will
have sufficient voting power to cause the approval of the Merger without the
affirmative vote of any other stockholder.
The Offer is scheduled to expire at 12:00 midnight, New York City time, on
Thursday, July 15, 1999, unless Purchaser elects to extend the period of time
for which the Offer is open. A copy of the press release issued by the Company
on June 11, 1999 announcing the Merger and the Offer is filed as Exhibit (a)(3)
to this Schedule 14D-9 and is incorporated herein by reference in its entirety.
(b) BACKGROUND OF THE OFFER; REASONS FOR THE RECOMMENDATION
Background of the Offer. From time to time during the past several years,
the Company has considered various strategic alternatives with a view toward
increasing stockholder value. Over the past few months, the Company has had
discussions with several potential purchasers of the Company. Discussions with
Parent and one other bidder (the "Bidder") became significant.
The Company has a history of discussions regarding strategic transactions
with the Bidder and its affiliates. In 1988, the Company made an offer to
purchase a competitive company ("Bidder Affiliate"), which company was
subsequently purchased by Bidder. Extensive investigation by the Federal Trade
Commission ("FTC") staff resulted in significant objections to the transaction
by the FTC. The Company's offer was withdrawn immediately prior to a vote by the
FTC on the staff's recommendation to block the transaction in federal court.
In 1991, the Company and Bidder Affiliate held further discussions and
conducted extensive antitrust due diligence regarding a potential business
combination. Based on the advice of advisors regarding the substantial risks to
completion of a business combination due to antitrust regulatory issues,
discussions were terminated.
In the Fall of 1996, the Company and Bidder Affiliate held further
discussions regarding a potential business combination. At that time, the
Company engaged antitrust counsel and economists to undertake an analysis of the
potential antitrust regulatory obstacles to completing such a transaction. Based
upon the advice of such advisors regarding the substantial risks to completion
of a business combination as a result of antitrust regulatory issues, these
discussions were terminated.
In August of 1997, immediately prior to the Company's initial public
offering, Bidder approached the Company with an offer to acquire all of the
Company's outstanding stock. The offer was rejected by the Company's Board of
Directors as inadequate. Bidder Affiliate was later acquired by the Bidder.
Bidder and the Company had preliminary discussions regarding a potential
business combination in the Spring of 1998. The Company once again undertook a
review of potential antitrust regulatory obstacles to completing a transaction
and, based upon such review, chose not to pursue further a potential transaction
due to antitrust regulatory concerns.
On October 28, 1998, James F. Clouser, Chief Executive Officer of the
Company, and Pierre Mottet, Chief Executive Officer of Parent, met in Phoenix,
Arizona to discuss various subjects, including the possible
14
<PAGE> 16
purchase of equipment from the Parent by the Company. They also generally
discussed the possibility of combining Parent and the Company.
In December 1998, the Company entered into an agreement to purchase certain
irradiation equipment from the Parent.
In the Winter of 1998, the Company informally engaged PaineWebber
Incorporated ("PaineWebber") and TM Capital Corp. ("TM Capital") as financial
advisors in connection with evaluating potential strategic transactions.
On January 7, 1999, Parent retained Bear, Stearns International Limited
("Bear Stearns") as exclusive financial advisor. Bear Stearns and IBA
subsequently conducted a review of Parent's strategy including, among other
things, a review of potential acquisitions.
On January 25, 1999, Mr. Clouser, Mr. Mottet and Yves Jongen, the President
of Parent, met in Hayward, California and had preliminary discussions concerning
a potential acquisition of the Company by the Parent. On February 2, 1999, the
Company provided Parent with a non-disclosure and standstill agreement. In the
course of those discussions, Mr. Clouser indicated that the Company might be
willing to consider a sale of the Company and suggested a valuation in excess of
$30 per Share. The non-disclosure and standstill agreement was not signed by
Parent.
On February 12, 1999, at a telephonic meeting of the Company's Board of
Directors, Mr. Clouser updated the Company's Board on his discussions with
management of Parent regarding a potential acquisition of the Company.
During February 1999, Mr. Mottet and Mr. Clouser exchanged e-mails
regarding potential synergies in the business.
On March 5, 1999, Mr. Mottet informed Mr. Clouser that Parent did not wish
to pursue an acquisition of the Company.
In early March 1999, following a significant decline in the trading price
of the Shares, Parent purchased in the open market 751,300 Shares, which
represented approximately 9.4% of the then outstanding Shares.
On March 17, 1999, Mr. Mottet contacted Mr. Clouser, who was then at a
business meeting in Australia, to discuss Parent's recent acquisition of stock
in the Company. Mr. Mottet confirmed to Mr. Clouser that, though Parent had
previously evaluated a potential acquisition of the Company, Parent's recent
stake in the Company was acquired for investment purposes and that there were no
plans to increase Parent's stake in the Company.
During March of 1999, financial advisors to the Company contacted senior
management of Bidder and other potential bidders regarding their interest in
acquiring the Company. Bidder and two other entities expressed interest;
however, only Bidder proceeded to conduct due diligence and propose an offer.
Senior management of Bidder first contacted Mr. Clouser to indicate their
interest in potentially pursuing a transaction on March 24, 1999.
On March 31, the Company's Board of Directors held a special meeting of the
Board of Directors to adopt a Stockholders' Rights Plan.
On April 15, 1999, Parent signed a definitive agreement to acquire all of
the outstanding capital stock of Griffith Micro Sciences International, a
Chicago-based EtO sterilization services company.
On April 16, 1999, Parent issued a press release announcing the signing of
the agreement to acquire Griffith Micro Sciences International.
On April 20, 1999, Mr. Clouser contacted Mr. Mottet to advise him that,
following the announcement of Parent's definitive agreement to acquire Griffith
Micro Sciences, a number of parties had approached the Company and that the
willingness of the Company to consider these approaches might eventually lead to
a potential sale.
15
<PAGE> 17
On April 20, 1999, PaineWebber contacted Bear Stearns and confirmed that
the Company would be interested in pursuing a potential business combination
with Parent.
On April 26, 1999, Mr. Clouser met with senior management of the Bidder to
discuss a potential transaction and the Company's concerns about the antitrust
regulatory issues presented by a potential transaction.
On May 13, 1999, Mr. Mottet met with Mr. Clouser in Washington, D.C. and
advised Mr. Clouser that the Parent was interested in conducting a preliminary
evaluation of a potential acquisition of the Company by Parent. Subsequent
discussions took place between Parent, the Company and their financial advisors,
which led to the execution on May 17, 1999 of a non-disclosure agreement.
On May 19, 1999, senior management of Bidder contacted Mr. Clouser to
express continued interest in the Company.
On May 20, 1999, senior management of Bidder contacted Mr. Clouser to
indicate that Bidder expected to have completed its antitrust regulatory
analysis in a few days. The parties agreed to hold a meeting on May 27, 1999.
From May 20 to May 23, 1999, associates of Parent's legal counsel, Dorsey &
Whitney LLP, conducted preliminary due diligence of the Company at the law
offices of Gunderson, Dettmer, Stough, Villeneuve, Franklin & Hachigian, LLP,
the Company's legal counsel. The due diligence consisted mainly of the review of
publicly available documents.
On May 24, 1999, at a meeting of the Company's Board of Directors, Mr.
Clouser updated the Board on his discussions with Parent and Bidder. The Board
asked questions and discussion ensued focusing on, among other things, each of
the potential purchasers, regulatory issues and the likelihood of completion of
each transaction.
On May 26, 1999, Mr. Clouser and Mr. Mottet, and representatives of Bear
Stearns, PaineWebber and TM Capital met in New York. On this occasion, the
Company made available to Parent certain confidential non-public information.
Parent performed a limited due diligence investigation of the Company through
discussions with Mr. Clouser and the Company's financial advisors about the
business and financial condition of the Company.
On May 26, 1999, senior management of Bidder contacted Mr. Clouser and
cancelled the previously scheduled May 27, 1999 meeting.
On May 27, 1999, senior management of Bidder contacted Mr. Clouser to
orally propose an offer of $21.00 per share in cash for all outstanding shares.
Mr. Clouser advised the Bidder that the price was not competitive.
On May 28, 1999, PaineWebber contacted Bear Stearns and indicated that the
Company would not consider a possible sale of the Company unless the price was
in excess of $25.00 per Share and the Company was protected from the risk of not
being able to complete the transaction if objections were raised by federal
antitrust law enforcement entities.
On May 28, 1999, financial advisors to the Company contacted senior
management of Bidder and indicated that in order to be competitive, Bidder's
offer must be in excess of $25.00 per Share and that Bidder must protect the
Company from the risk of not being able to complete the transactions if
objections were raised by federal antitrust law enforcement entities by (i)
making a significant commitment regarding any potential divestitures which may
be required by federal antitrust law enforcement entities, (ii) allowing the
Company to control any divestiture decisions in connection with obtaining
approval of federal antitrust law enforcement entities and (iii) committing to
pay a substantial termination fee as liquidated damages to the Company if the
transaction was not completed because Bidder was unable to obtain the required
regulatory approvals.
16
<PAGE> 18
On May 28, 1999, senior management of Bidder contacted Mr. Clouser and
indicated that Bidder was willing to pay in excess of $25.00 per Share and
assume the antitrust regulatory risk, although no specific proposal for
addressing the regulatory issues was made at that time.
On June 1, 1999, financial advisors to the Company and Bidder discussed
potential elements of Bidder's offer. Financial advisors to the Company again
reiterated the minimum conditions of any proposal from Bidder. Financial
advisors to the Company offered to provide Bidder with additional financial
information upon receipt of an executed non-disclosure and standstill agreement.
Bidder declined to sign the non-disclosure and standstill agreement.
On June 2, 1999, Mr. Mottet informed Mr. Clouser of Parent's willingness to
pursue acquisition negotiations at a price of $25.00 per Share. Mr. Clouser
informed Mr. Mottet that the price was below what had been indicated by another
potential bidder. Mr. Clouser and Mr. Mottet discussed having a meeting in New
York on June 9, 1999 and Mr. Clouser asked Mr. Mottet to consider increasing his
price.
On June 3, 1999 Bear, Stearns had conversations with PaineWebber to discuss
the process for beginning negotiations.
On June 4, 1999, Mr. Mottet called to inform Mr. Clouser that Parent would
be willing to pursue negotiations based on the price of $27.00 per Share and
provide the Company with certain protections relating to the inability to close
this transaction under certain circumstances assuming that the negotiations
could proceed quickly. Mr. Mottet also informed Mr. Clouser that Parent would be
willing to pursue such negotiations only if the Selling Stockholders were
willing to execute an agreement with Parent which gave Parent an option to
purchase the shares owned by the Selling Stockholders. On the same day Bear
Stearns contacted PaineWebber to confirm the $27.00 per Share price and request
an exclusive negotiating period. PaineWebber rejected any negotiating
exclusivity. Based on these conversations, it was agreed that negotiations could
start in New York on June 7, 1999.
On June 5, 1999, Mr. Mottet informed Mr. Clouser that the $27.00 per Share
offer would be rescinded if negotiations were not accelerated.
On June 5, 1999, Mr. Clouser agreed to provide initial comments on draft
documents on June 6 and to meet in New York on the evening of June 7, 1999 to
commence negotiations. Later that day, counsel for Parent delivered initial
drafts of the Merger Agreement and the Stockholders' Agreement to counsel for
the Company.
On June 5, 1999, senior management of Bidder spoke by telephone with Mr.
Clouser and indicated Bidder would only be willing to pay $25.00 per Share.
On June 6, 1999, at a special meeting of the Company's Board of Directors,
Mr. Clouser advised the Board of the status of his discussions with Parent and
Bidder. The Board asked questions and discussion ensued regarding, among other
things, the relative merits of the two transactions, the regulatory and
competitive risks associated with pursuing each of the transactions, the
different prospects for significant delay in closing of each of the transactions
due to antitrust regulatory issues and the likelihood of completion of each of
the transactions.
On June 6, 1999, counsel for the Company provided initial comments on the
documents to counsel for Parent. On June 7, 1999, counsel for the Company
provided detailed comments on the Merger Agreement draft.
On June 7, 1999, financial advisors to the Company contacted financial
advisors to the Bidder and expressed concern that Bidder was not making an offer
in excess of $25.00 per Share as previously indicated and appeared to be
noncommittal on protecting the Company from the risk of being unable to complete
the transaction due to antitrust regulatory objections.
On June 8, 1999, Parent's Board of Directors approved the proposal to
acquire the Company at a purchase price of $27.00 per Share and negotiations of
the Merger Agreement and Stockholders' Agreement
17
<PAGE> 19
were initiated. The Company, its counsel and financial advisors met with Parent,
its counsel and financial advisors to negotiate the Merger Agreement at various
times on June 8, 9 and 10.
On June 8, 1999, during a brief meeting at an unrelated business function,
Mr. Clouser requested that senior management of Bidder provide him with Bidder's
final and best offer with respect to price, an agreed upon divestiture
arrangement and termination fees if the transaction was not completed.
From June 7 through June 9, 1999, the Company held discussions with certain
stockholders of the Company regarding the Stockholders' Agreement.
On June 8, 1999, at a special meeting of the Company's Board of Directors,
Mr. Clouser advised the Board of the status of his discussions with Parent and
Bidder. The Board asked questions and discussion ensued regarding, among other
things, the relative merits of the two transactions, the regulatory and
competitive risk associated with pursuing a transaction with each of the
bidders, the different prospects for significant delay in closing of each of the
transactions due to antitrust regulatory issues and the likelihood of completion
of each of the transactions.
On June 9, 1999, the president of Bidder left a voicemail message with Mr.
Clouser indicating that Bidder was willing to pay significantly more than $25.00
per Share. Mr. Clouser was unable to reach the president of the Bidder and
contacted another member of Bidder's senior management. In that call, Mr.
Clouser again reiterated his need to have a best and final offer from Bidder as
to the price to be paid by Bidder and as to Bidder's commitment regarding
divestitures and payment of termination fees. Later on June 9, 1999, the
president of Bidder left another voicemail proposing an offer of $29.00 per
Share and expressing a willingness to divest a number of facilities. Following
that call, financial advisors to the Company contacted senior management of
Bidder and indicated that because of the significant antitrust regulatory risks
that a transaction with Bidder might not be completed and the high likelihood of
significant harm to the Company's business as a result of an aborted transaction
with the Bidder, the Company would require a very substantial termination fee
payable by Bidder in the event the transaction was not completed because of the
inability to obtain antitrust regulatory approval. At this time, counsel for the
Company provided drafts of definitive documents to counsel for the Bidder.
On June 9 and June 10, 1999, counsel for Parent conducted further due
diligence of the Company at the offices of counsel for the Company.
On June 9, 1999, Mr. Clouser advised Mr. Mottet that the Company had
received a higher bid and requested that the Parent increase its bid. Mr. Mottet
declined to increase the Parent's offer price and sought to accelerate execution
of the Merger Agreement and Stockholders' Agreement. PaineWebber, TM Capital and
SG Cowen Securities Corporation, which had also been retained as a financial
advisor to the Company contacted Bear Stearns to seek an increase in the
Parent's offer price and to terminate any further due diligence of the Company
by the Parent.
On June 10, 1999, senior management of Bidder contacted Mr. Clouser to
discuss the proposed transaction and raised numerous concerns with the terms of
the transaction and the draft definitive documents and indicated that further
negotiation would be required. In particular, Bidder rejected the Company's
proposed termination fee and stated that any required divestiture decisions
would be made solely by Bidder. Finally, senior management of Bidder stated that
this would be Bidder's best and final offer.
On June 10, 1999, Bear Stearns and Arthur Andersen performed limited due
diligence on behalf of the Parent, meeting with members of the Company's
management and PaineWebber at the offices of counsel for the Company.
On June 10, 1999, prior to a special meeting of Company's board of
directors, Mr. Clouser once again contacted Mr. Mottet to seek an increase in
the offer price. Once again Mr. Mottet declined.
On June 10, 1999, the Company's Board of Directors held a special
telephonic meeting to consider and evaluate the competing offers and the Merger
Agreement. During that meeting, the Board received the advice of its advisors
regarding the timing and likelihood of completion of both transactions. In
addition, the Company's financial advisors made a presentation regarding the
fairness of the transaction provided for in the
18
<PAGE> 20
Merger Agreement and delivered their oral opinion that the transactions
contemplated by the Merger Agreement were fair to the Company's stockholders
from a financial point of view. The Board asked questions and discussion ensued
regarding, among other things, the relative merits of the two transactions, the
regulatory and competitive risk associated with each of the transactions, the
different prospects for significant delay in closing of each of the transactions
due to antitrust regulatory issues and the likelihood of completion of each of
the transactions. Based on numerous factors, including the Board's view, based
on the advice of counsel, that due to antitrust regulatory concerns there was
substantially greater likelihood that a transaction with Bidder could not be
completed, or would be subject to an unreasonable delay in completion, the
Company's Board of Directors approved Parent's proposal to acquire the Company
at a purchase price of $27.00 per Share as well as the Merger Agreement
Reasons for the Recommendation.
At a telephonic meeting on June 10, 1999, the Board of Directors of the
Company (i) approved the Offer and the Merger (the "Transactions"), (ii)
determined that the Transactions are fair to, and in the best interests of, the
stockholders of the Company and (iii) resolved to recommend that stockholders
accept the Offer and tender their Shares.
In arriving at its decision to approve the Transactions and to recommend
acceptance of the Offer, the Board of Directors considered, among other things,
(i) the terms and conditions of the Merger Agreement, including the amount and
form of the consideration; (ii) the fact that the $27.00 per Share price
represents a premium of approximately 39% over the closing sale price of $19.50
per Share as reported on the Nasdaq National Market on June 10, 1999, the date
the Board of Directors authorized and approved the Transactions; (iii) the
recent historical market prices of the Shares; (iv) the Board of Directors'
knowledge of the business, operations, prospects, properties, assets and
earnings of the Company; (v) the effect of the transaction on the Company's
relationships with its employees and customers; (vi) the likelihood that the
proposed Merger would be consummated, including the experience, reputation and
financial condition of Parent; (vii) the advantages in a competitive environment
of strategically aligning with a larger, better capitalized company; (viii) the
fact that pursuant to the Merger Agreement, the Company is not prohibited from
responding to any unsolicited Acquisition Proposal (as defined in the Merger
Agreement) to acquire the Company, to the extent that the Board of Directors of
the Company determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's stockholders under the DGCL; (ix) the Board's view, based on
advice of counsel, that due to antitrust regulatory concerns there was
substantially greater likelihood that a transaction with Bidder could not be
completed or would be subject to an unreasonable delay in completion; and (x)
the verbal opinions (the "Fairness Opinions") of PaineWebber and TM Capital
received at the meeting of the Board of Directors held on June 10, 1999, to the
effect that, as of such date, and on the basis of the various factors described
to the Board of Directors at the meeting, the $27.00 in cash per Share to be
received by the holders of Shares pursuant to the Offer and the Merger is fair
to the Company's stockholders. In addition, the Board of Directors considered
presentations made to them by PaineWebber and TM Capital, which included
PaineWebber's and TM Capital's analyses of, among other things: (a) certain
publicly available financial information concerning the Company; (b) internal
financial analyses and other information furnished by management of the Company;
(c) discussions of the business, financial condition and future prospects of the
Company with members of senior management; (d) reported price and trading
activity for the Shares; (e) certain financial and stock market information that
was compared with similar information for certain other companies whose
securities are publicly traded; (f) the terms of recent comparable business
combinations in comparison with the terms of the proposed transaction; and (g)
the various agreements relating to the Transactions.
No limitations were imposed by the Board of Directors or management of the
Company on PaineWebber or TM Capital with respect to the investigations made, or
the procedures followed by them, in rendering the Fairness Opinions. For
purposes of their opinions, PaineWebber and TM Capital relied, without
independent verification, on the accuracy, completeness and fairness of all
financial and other information reviewed by it. The written copies of the
Fairness Opinions contain a description of the factors considered, the
assumptions made and the scope of review undertaken by PaineWebber and TM
Capital in rendering their respective opinions. THE FULL TEXT OF THE WRITTEN
COPIES OF THE FAIRNESS OPINIONS
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<PAGE> 21
RECEIVED BY THE COMPANY FROM PAINEWEBBER AND TM CAPITAL ARE FILED AS EXHIBITS
(A)(4) AND (A)(5), RESPECTIVELY TO THIS SCHEDULE 14D-9 AND ARE INCORPORATED
HEREIN BY REFERENCE AND ARE INCLUDED IN THEIR ENTIRETY AS ANNEXES B AND C TO
THIS STATEMENT. STOCKHOLDERS ARE URGED TO READ SUCH OPINIONS IN THEIR ENTIRETY.
The Board of Directors recognized that consummation of the Offer and the
Merger will deprive current stockholders of the Company of the opportunity to
participate in the future growth prospects of the Company and, therefore, in
reaching its conclusion to approve the Transactions, determined that the
historical results of operations and future prospects of the Company are
adequately reflected in the $27.00 price per Share. In addition, the Board of
Directors considered the possibility that, in the event the Offer but not the
Merger is consummated, the number of stockholders could be reduced, which could
adversely affect the liquidity and market value of the Shares.
In light of all the factors set forth above, the Board of Directors
approved the Transactions. In view of the variety of factors considered in
connection with its evaluation of the Transactions, the Board of Directors did
not assign relative weights to the specific factors considered in reaching its
decision.
It is expected that if Shares are not accepted for payment by the Purchaser
in the Offer and if the Merger is not consummated, the Company's current
management, under the general direction of the Board of Directors, will continue
to manage the Company as an on-going business. However, the Company may, under
these circumstances, continue to explore other possible methods of maximizing
stockholder value.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company retained PaineWebber, TM Capital and SG Cowen Securities
Corporation ("Cowen") to provide investment banking services in connection with
a possible business transaction for the Company. Pursuant to a letter agreement
dated June 9, 1999 between the Company and PaineWebber, the Company has agreed
to pay PaineWebber a fee of approximately $1,025,000 for acting as financial
advisor in connection with the Transactions (a) in the event that the Company
enters into an agreement in principle with a purchaser, or (b) within 18 months
after the termination of the engagement, the Company enters into a definitive
agreement which subsequently results in a sale transaction, or (c) within 18
months after the termination of the engagement, a sale transaction is
consummated with a purchaser. Pursuant to a letter agreement dated June 9, 1999
between the Company and TM Capital, the Company has agreed to pay TM Capital a
fee of approximately $1,150,000 for acting as financial advisor in connection
with the transactions in the event that a transaction takes place involving the
sale of the Company either by way of tender offer, merger, stock or asset sale,
divestiture, other transaction or combination thereof. Pursuant to a letter
agreement dated June 3, 1999 between the Company and Cowen, the Company has
agreed to pay Cowen a fee of approximately $1,025,000 for acting as financial
advisor in connection with the transactions in the event that one or a series of
transactions whereby, directly or indirectly, control of or a material interest
in the Company or any of its businesses or assets are transferred to or combined
with that of any person or one or more persons formed by or affiliated with such
person, including, without limitation, a disposition or exchange of capital
stock or assets, a merger or consolidation, a tender or exchange offer, a
leveraged buyout, or the formation of a joint venture or partnership or any
similar transaction. The Company has also agreed to reimburse PaineWebber, TM
Capital and Cowen for their reasonable out-of-pocket expenses incurred in
connection with rendering financial advisory services, including fees and
disbursements of its legal counsel. The Company has agreed to indemnify
PaineWebber, TM Capital and Cowen and their respective directors, officers,
agents, employees and controlling persons for certain costs, expenses and
liabilities to which each may be subjected arising out of or related to its
engagement as financial advisor.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer.
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<PAGE> 22
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) During the past 60 days, no transactions in Shares have been effected
by the Company or, to the best of the Company's knowledge, by any of its
executive officers, directors, affiliates or subsidiaries, except as follows:
1. The Company has granted Company Stock Options to, and sold Shares upon
exercise of Company Stock Options under the Company Option Plans.
2. Charles W. King, Jr., a Director of the Company, is a general partner of
KFFP II, L.P., a California limited partnership ("KFFP II") and is the
trustee and sole beneficiary of the Charles W. King, Jr. Revocable Trust
(the "King Revocable Trust"). Each of KFFP II and the King Revocable
Trust are parties to the Stockholders' Agreement (see "Item 3 -- The
Stockholders Agreement") the terms of which are hereby incorporated by
reference.
3. On May 24, 1999, James F. Clouser exercised a Company Stock Option to
purchase 10,000 Shares at an exercise price of $5.00 per Share.
4. James F. Clouser made two gifts of 5,000 shares each on May 24, 1999.
5. On May 24, 1999 the Company made its regular annual grant of Company
Stock Options to the following executive officers at the per Share
exercise prices set forth below:
<TABLE>
<CAPTION>
NAME SHARES EXERCISE PRICE
---- ------ --------------
<S> <C> <C>
James F. Clouser............................................ 43,500 $14.625
D. Patterson Adams.......................................... 10,000 $14.625
David E. Meyer.............................................. 15,000 $14.625
Eric W. Beers............................................... 10,000 $14.625
Donald A. Currie............................................ 4,000 $14.625
Eugene C. Davis............................................. 2,000 $14.625
Lisa C. Foster.............................................. 10,000 $14.625
Carole-Lynn S. Glass........................................ 10,000 $14.625
</TABLE>
(b) To the best of the Company's knowledge, all of the Company's executive
officers and directors who own Shares currently intend to tender all of their
Shares pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer that relates to or would result
in (i) an extraordinary transaction, such as a merger or reorganization
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relate
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The information contained in Exhibits (a)(1), (a)(2), (a)(4) and (a)(5)
referred to in Item 9 below is incorporated herein by reference.
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<PAGE> 23
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C>
(a)(1) Offer to Purchase dated June 17, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Press release issued by the Company on June 11, 1999.
(a)(4)(1) Fairness Opinion of PaineWebber Incorporated dated June 10,
1999.*
(a)(5)(2) Fairness Opinion of TM Capital Corp. dated June 10, 1999.*
(a)(6) Letter to Stockholders dated June 24, 1999 from James F.
Clouser, Chairman of the Board and Chief Executive Officer
of the Company.*
(c)(l) Merger Agreement dated as of June 10, 1999, among IBA, IBA
GP, the Purchaser and the Company.
(c)(2) Stockholders' Agreement dated as of June 10, 1999 among IBA,
IBA GP, Purchaser and certain stockholders of the Company
listed on Schedule I thereto.
(c)(3) Form of Indemnification Agreement.
(c)(4) Article XI of the Company's Certificate of Incorporation, as
amended to date.
(c)(5) Article VI of the Bylaws of the Company.
(c)(6) Employment Agreement dated as of June 10, 1999, among James
F. Clouser and the Company.
(c)(7) Form of Two Year Severance Agreement between the Company and
certain of its executive officers.
(c)(8) Form of One Year Severance Agreement between the Company and
certain of its executive officers.
</TABLE>
- ---------------
* Included in copies mailed to stockholders.
(1) Attached hereto as Annex B.
(2) Attached hereto as Annex C.
22
<PAGE> 24
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
accurate.
STERIGENICS INTERNATIONAL, INC.
By: /s/ JAMES F. CLOUSER
------------------------------------
James F. Clouser
Chief Executive Officer
Dated: June 23, 1999
23
<PAGE> 25
ANNEX A
STERIGENICS INTERNATIONAL, INC.
4020 CLIPPER COURT
FREMONT, CALIFORNIA 94538
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about June 24, 1999 as a
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 filed by
SteriGenics International, Inc. (the "Company") (the "Schedule 14D-9") to the
holders of record of shares of common stock, par value $0.001 per share, of the
Company (the "Common Stock") together with the associated rights to purchase
shares of Series A Junior Participating Preferred Stock, par value $0.001 per
share (the "Rights," and together with the Common Stock, the "Shares") at the
close of business on or about June 10, 1999. You are receiving this Information
Statement in connection with the possible election of persons designated by the
Purchaser (as defined below) to a majority of the seats on the Board of
Directors of the Company.
On June 10, 1999, the Company, Ion Beam Applications s.a., a Belgian
corporation (the "Parent"), Ion Beam Applications G.P., a Delaware general
partnership which owns all of the outstanding capital stock of Purchaser and of
which the Parent is the controlling general partner ("IBA GP") and IBA
Acquisition Corp., a Delaware corporation and indirect wholly owned subsidiary
of the Parent (the "Purchaser") entered into a Merger Agreement (the "Merger
Agreement") in accordance with the terms and subject to the conditions of which
(i) the Parent will cause the Purchaser to commence a tender offer (the "Offer")
for all outstanding Shares at a price of $27.00 per Share to the seller in cash
and without interest thereon, and (ii) the Purchaser will be merged with and
into the Company (the "Merger"). As a result of the Offer and the Merger, the
Company will become an indirect, wholly-owned subsidiary of the Parent.
The Merger Agreement requires the Company to use its best efforts to cause
the Purchaser's designees to be elected to the Board of Directors under the
circumstances described therein. See "Board of Directors and Executive Officers
of the Company."
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action at this time. Capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth in the
Schedule 14D-9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on
Thursday June 17, 1999. The Offer is scheduled to expire at 12:00 midnight, New
York City time, on Thursday July 15, 1999 unless the Offer is extended.
The following information contained in this Information Statement
concerning the Purchaser has been furnished to the Company by the Purchaser, and
the Company assumes no responsibility for the accuracy or completeness of such
information.
<PAGE> 26
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
GENERAL
As of the date hereof, the authorized stock of the Company consists of
15,000,000 Shares, of which, as of June 21, 1999, 8,018,820 shares of Common
Stock were issued and outstanding, and 1,000,000 shares of Preferred Stock, no
shares of which are outstanding. The Board of Directors currently consists of
one class with five members. At each annual meeting of stockholders, all five
directors are elected for one-year terms. The Company's officers serve at the
discretion of the Board.
Pursuant to the Merger Agreement, promptly upon the purchase by the
Purchaser of any Shares pursuant to the Offer following the expiration date of
the Offer, Purchaser shall be entitled to designate directors of the Company
constituting a majority of the Board, and the Company shall use its best efforts
to, upon request by Purchaser, promptly, at the Company's election, either
increase the size of the Board to the extent permitted by its Certificate of
Incorporation or secure the resignation of such number of directors as is
necessary to enable Purchaser's designees to be elected to the Board and to
cause Purchaser's designees to be so elected and to constitute at all times
after the Tender Offer Purchase Time a majority of the Board.
Purchaser has informed the Company that it will choose the Purchaser
designees from persons listed below. Parent has informed the Company that each
of the Purchaser designees has consented to act as a director, if so designated.
Biographical information concerning each of the Purchaser designees is presented
below. The following biographical information provided herein regarding Parent,
Purchaser, and any Purchaser designees has been furnished by Parent, and the
Company assumes no responsibility for the accuracy or completeness of such
information.
<TABLE>
<CAPTION>
POSITION WITH PARENT;
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY
- -------------------------------------------- --------------------------------------------
<S> <C>
Yves Jongen................................. President of IBA since March 28, 1986. Head
of Cyclotron Laboratory at the University of
Louvain, Belgium from July 1, 1970 to March
28, 1986.
Pierre Mottet............................... Chief Executive Officer of IBA since January
1, 1995. Executive Vice-President of IBA
from January 1, 1990 to December 31, 1994;
Vice-President Marketing and Sales of IBA
from April 15, 1987 to December 31, 1989.
Eric de Lamotte............................. Chief Financial Officer of IBA since
February 1, 1991.
Jean-Louis Bol.............................. Technical Director of IBA since 1992.
Olivier Legrain............................. Chief Financial Officer of
Mediflash/Scanditronix Medical AB, a Swedish
wholly owned subsidiary of IBA, since
January 1999. Financial Controller of IBA
from August 1996 to December 1998. Auditor
at Claes & Co Auditors from June 1993 to
July 1996.
Eric Belvaux................................ Controller at IBA since 1997. Financial
analyst at Furon during 1997. Worked for
Pfizer Animal Health Group from 1995 to
1997. Worked for Smithklein Beecham Animal
Health from 1992 to 1995.
</TABLE>
The Purchaser has informed the Company that none of the Purchaser designees
(i) is currently a director of, or holds any position with, the Company, (ii)
has a familial relationship with any of the directors or executive officers of
the Company or (iii) to the best knowledge of the Purchaser, beneficially owns
any securities (or rights to acquire any securities) of the Company. The Company
has been advised by the
2
<PAGE> 27
Purchaser that, to the best of the Purchaser's knowledge, none of the Purchaser
designees has been involved in any transaction with the Company or any of its
directors, executive officers or affiliates which are required to be disclosed
pursuant to the rules and regulations of the Commission, except as may be
disclosed herein or in the Schedule 14D-9.
It is expected that the Purchaser designees may assume office at any time
following the purchase by the Purchaser of Shares pursuant to the Offer, which
purchase cannot be earlier than July 15, 1999, and that, upon assuming office,
the Purchaser designees will thereafter constitute at least a majority of the
Board of Directors.
Biographical information concerning each of the Company's current directors
and executive officers as of June 21, 1999 is presented on the following pages.
<TABLE>
<CAPTION>
NAME DIRECTOR SINCE AGE POSITIONS AND OFFICES HELD WITH THE COMPANY
---- -------------- --- -----------------------------------------------
<S> <C> <C> <C>
James F. Clouser................ 1988 48 Chairman of the Board, President and Chief
Executive Officer
Charles W. King, Jr............. 1978 63 Director
Barrick L. Prince............... 1998 52 Director
Frederick J. Ruegsegger......... 1998 43 Director
James R. Yarter................. 1998 62 Director
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OFFICER SINCE AGE POSITIONS AND OFFICES HELD WITH THE COMPANY
------------------ -------------- --- -----------------------------------------------
<S> <C> <C> <C>
D. Patterson Adams.............. 1998 46 President of Advanced Applications Division
David E. Meyer.................. 1997 48 President of Medical Products Division
Eric W. Beers................... 1994 39 Senior Vice President of Engineering
Donald A. Currie................ 1998 42 Vice President of Operations, Eastern Region
Eugene C. Davis................. 1997 51 Vice President of Operations, Western Region
Lisa C. Foster.................. 1997 38 Vice President of Quality Assurance
Carole-Lynn S. Glass............ 1999 39 Vice President of Finance and Administration
and Chief Financial Officer
</TABLE>
James F. Clouser became Chairman of the Board in 1999. Mr. Clouser joined
the Company in June 1988 as President and Chief Executive Officer. Previously,
from 1984 to 1988 he served as Chief Operating Officer of Attain, Inc., a high
technology start-up manufacturer of automatic test equipment for semiconductor
devices. Mr. Clouser has a Bachelor of Science degree in Electrical Engineering
from Pennsylvania State University, a Masters of Business Administration degree
in Finance from Wayne State University, and a Masters of Science degree in
Accounting from Rochester Institute of Technology.
Charles W. King, Jr., a founder and Director of the Company, was Chairman
of the Board of the Company from the Company's inception until 1999. Mr. King is
a private investor and real estate developer and has been a Managing Partner in
Charles King & Associates since 1965.
Barrick L. Prince became a Director of the Company in 1998. Mr. Prince has
owned and operated a multi-million dollar trucking company in Northern
California since 1989. From 1979 to 1989, Mr. Prince held several Vice President
titles at the Matson Navigation Company, a major steamship company. Mr. Prince
is a co-founder of The Leadership Network, an organization for business leaders,
and currently serves as a member of the Board of Directors for Goodwill
Industries of the Greater East Bay. Mr. Prince has a Bachelor of Science in
Business Administration from California State Polytechnic College.
Frederick J. Ruegsegger became a Director of the Company in 1998. Mr.
Ruegsegger has been the Senior Vice President, Finance and Corporate Development
and Chief Financial Officer of AXYS Pharmaceuticals, Inc. since January 1998.
Prior to that, he served as Vice President, Finance and Administration and Chief
Financial Officer of Arris Pharmaceutical Corporation from December 1996 until
January 1998. From 1993 to 1996, he was President and Chief Executive Officer of
EyeSys Technologies, Inc., a medical instrument and
3
<PAGE> 28
software company. Mr. Ruegsegger received a B.S. degree in Economics from the
University of Illinois and a Master of Management from Northwestern University's
Kellogg Graduate School of Management.
James R. Yarter became a Director of the Company in 1998. Mr. Yarter has
been a consultant to medical device manufacturers since April 1996. From October
1995 to April 1996, Mr. Yarter served as President and Chief Executive Officer
of U.S. Medical, a medical device company. From February 1994 to October 1995,
Mr. Yarter was President and Chief Executive Officer of BLOCK Medical, a medical
device company. Mr. Yarter provided private consulting services to medical
device manufacturers from 1990 to February 1994. Previously, Mr. Yarter served
as a corporate officer at C.R. Bard, a medical equipment and supplies
manufacturer.
D. Patterson Adams joined the Company in January 1998 as Vice President and
General Manager of the Advanced Applications Division. In June 1998, Mr. Adams
was promoted to President of the Advanced Applications Division. Prior to
joining the Company, Mr. Adams served as a consultant to health care providers
and medical manufacturers as President of VestCorp, an investment holding
company, from July 1995 to January 1998. Mr. Adams served as Chief Operating
Officer of Progressive Capital Investment Corporation from July 1993 to June
1995. From June 1988 to June 1993, Mr. Adams was Vice President of EtO
Operations for Isomedix, Inc. Mr. Adams earned his Bachelor of Science Degree in
Biology from the University of Memphis.
David E. Meyer joined the Company in November 1989 as General Manager of
the Company's Schaumburg facility and in May 1991 was promoted to Senior Vice
President of Operations. In July 1997, Mr. Meyer was promoted to President of
the Medical Products Division. From 1976 to 1989, Mr. Meyer held various
positions with the Barber-Greene Company, a producer of road construction
equipment, most recently that of Manufacturing Manager. Mr. Meyer has a Bachelor
of Science degree in Business Administration from Valparaiso University and a
Masters of Science degree in Management from Aurora University.
Eric W. Beers joined the Company in February 1994 as Senior Vice President
of Engineering. Prior to joining SteriGenics and since 1980, Mr. Beers held
several engineering and managerial positions with Nordion, a supplier of Cobalt
60 and irradiation equipment, the most recent of which was as Manager of the
Industrial Irradiation Engineering Department. Mr. Beers has a degree in
Mechanical/Aeronautical Engineering from Carleton University in Canada and is a
Member of the Association of Professional Engineers of Ontario, Canada.
Donald A. Currie joined the Company in March 1991 as General Manager of the
Company's Westerville facility. In August 1994, Mr. Currie became Director of
Operations overseeing the Company's Westerville and Schaumburg facilities and
was promoted to Vice President of Operations, Non-Medical in November 1996. In
January 1998, Mr. Currie became Vice President of Operations, Eastern Region.
Mr. Currie has a Bachelor of Arts degree in Materials and Operations Management
from Michigan State University.
Eugene C. Davis joined the Company in April 1994 as Vice President of
Quality Assurance and Regulatory Affairs. In January 1996, he became Vice
President of Sales and Marketing, and in July 1997, he became the Vice President
of Operations for the Western Region. From 1979 to 1993, Mr. Davis held various
positions with the Opthalmic Surgical Products Division of Optical Radiation
Corporation, an opthalmic surgical products company, the most recent of which
was Vice President of Quality Assurance. Mr. Davis has a Bachelor of Arts degree
from California State Polytechnic University at Pomona.
Lisa C. Foster joined the Company in January 1989 as Quality Assurance
Manager at the Company's Decatur facility. In February 1990, Ms. Foster
transferred to the Company's Schaumburg facility as Quality Assurance Manager.
Later that year she joined the Corporate staff, assuming the responsibility of
Corporate Quality Assurance Manager. In April 1992, Ms. Foster was promoted to
Director of Corporate Quality Assurance and in June 1997 was promoted to Vice
President of Quality Assurance. Ms. Foster has a Bachelor of Science degree in
Food and Nutrition from Mississippi University for Women and a Masters of
Science degree in Food Chemistry from Mississippi State University.
Carole-Lynn S. Glass joined the Company in February, 1996 as Corporate
Controller. In July 1997, Ms. Glass was promoted to Director of Finance, and in
July 1998, was appointed by the Board of Directors as
4
<PAGE> 29
Assistant Secretary. In June 1999, Ms. Glass was promoted to Chief Financial
Officer and Vice President of Finance and Administration. From 1994 to 1996, Ms.
Glass was the Corporate Controller of 3Soft Corporation, an intellectual
properties company servicing the semiconductor industry. Ms. Glass also held
various positions from 1985 to 1994, at Esprit/ADI Systems, Inc., a computer
peripheral manufacturer, the most recent being Corporate Controller. Ms. Glass
has a Bachelor of Science degree in Accounting from the State University of New
York at Fredonia.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the fiscal year ended March 31, 1999, the Board of Directors held
eleven meetings. For such fiscal year, each of the directors during the term of
their tenure attended or participated in at least 75% of the aggregate of (i)
the total number of meetings or actions by written consent of the Board of
Directors and (ii) the total number of meetings held by all Committees of the
Board of Directors on which each such director served. The Board of Directors
has two standing committees: the Audit Committee and the Compensation Committee.
During the fiscal year ended March 31, 1999, the Audit Committee of the
Board of Directors held one meeting. The Audit Committee reviews, acts on and
reports to the Board of Directors with respect to various auditing and
accounting matters, including the selection of the Company's accountants, the
scope of the annual audits, fees to be paid to the Company's accountants, the
performance of the Company's accountants and the accounting practices of the
Company. The members of the Audit Committee during the fiscal year ended March
31, 1999 were James R. Yarter and Frederick J. Ruegsegger.
During the fiscal year ended March 31, 1999, the Compensation Committee of
the Board of Directors held five meetings. The Compensation Committee reviews
the performance of the executive officers of the Company and reviews the
compensation programs for other key employees, including salary and cash bonus
levels and option grants under the 1997 Equity Incentive Plan. The Compensation
Committee also administers the Company's stock option plans and Employee Stock
Purchase Plan. The members of the Compensation Committee during the fiscal year
ended March 31, 1999 were James R. Yarter and Frederick J. Ruegsegger.
DIRECTOR COMPENSATION
James R. Yarter, Frederick J. Ruegsegger and Barrick L. Prince each receive
$2,000 per Board meeting that he attends and $1,000 per telephonic Board
meeting. In addition, if a committee meeting occurs on a date on which the Board
does not meet, each committee member receives $2,000 per committee meeting that
he attends and $1,000 per telephonic committee meeting. The remaining directors
receive no remuneration for serving on the Board of Directors, although
directors are reimbursed for all reasonable expenses incurred by them in
attending Board and committee meetings.
Non-employee Board members are eligible for option grants pursuant to the
provisions of the Automatic Option Grant Program under the Company's 1997 Equity
Incentive Plan. Under the Automatic Option Grant Program, each individual who
first becomes a non-employee Board member after the date of the Company's
initial public offering will be granted an option to purchase 15,000 shares of
the Company's Common Stock on the date such individual joins the Board ("Initial
Grant"). In addition, at each Annual Meeting of Stockholders held in 1998 or
thereafter, each individual who will continue to serve as a member of the Board
after such meeting will receive an additional option to purchase 3,000 shares of
Common Stock ("Annual Grant"). The exercise price for each option granted under
the Automatic Option Grant Program will be equal to the fair market value per
share of the Common Stock on the automatic grant date. Each Initial Grant will
become vested and exercisable with respect to 24% of the option shares on the
first anniversary of the date of grant and with respect to an additional 2% of
the option shares upon the completion of each month of service thereafter, until
the option is fully vested and exercisable 50 months after the date of grant.
Each Annual Grant will become fully vested and exercisable on the first
anniversary of the date of grant. Pursuant to the Automatic Option Grant
Program, Messrs. Yarter, Ruegsegger and Prince were each granted an option to
purchase 15,000 shares of Common Stock in January, August and October 1998,
respectively, at an exercise
5
<PAGE> 30
price of $20.375, $19.75 and $21.00 per share, respectively. Pursuant to the
Automatic Option Grant Program, Messrs. King and Yarter were each granted an
option to purchase 3,000 shares of Common Stock on August 5, 1998 at an exercise
price of $19.75 per share.
Directors who are also employees of the Company are eligible to receive
options and be issued shares of Common Stock directly under the 1997 Equity
Incentive Plan and are also eligible to participate in the Company's Employee
Stock Purchase Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed
in June 1997,
and the members of the Compensation Committee during the fiscal year ended March
31, 1999 were
Messrs. James R. Yarter and Frederick J. Ruegsegger. Neither of these
individuals was at any time during the fiscal year ended March 31, 1999, or at
any other time, an officer or employee of the Company. No executive officer of
the Company serves as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving as a
member of the Company's Board of Directors or Compensation Committee.
6
<PAGE> 31
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following Summary Compensation Table sets forth information concerning
cash and non-cash compensation earned during the fiscal year ended March 31,
1999 by the Company's Chief Executive Officer and each of the Company's other
four highest paid executive officers whose total compensation for services in
all capacities to the Company exceeded $100,000 during such year (collectively,
the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
NUMBER OF
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) OPTIONS(#) ($)(2)
--------------------------- ---- ------------ -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
James F. Clouser........................... 1999 $223,086 $100,000 75,000 $3,460
President, Chief Executive Officer 1998 203,890 89,834 125,000 3,772
and Director 1997 179,667 89,834 -- 3238
David E. Meyer............................. 1999 123,088 50,446 10,000 3,285
President of Medical Products Division 1998 111,654 48,055 15,000 3,993
1997 96,088 48,044 5,000 2,474
Eric W. Beers.............................. 1999 123,088 50,446 10,000 3,314
Senior Vice President of Engineering 1998 114,467 43,163 17,500 3,941
1997 95,918 43,163 5,000 2,361
Eugene C. Davis............................ 1999 110,975 42,506 2,500 3,373
Vice President of Operations, Western 1998 106,070 39,642 7,500 3,068
Region 1997 99,105 39,642 5,000 2,724
Donald A. Currie........................... 1999 104,075 34,308 2,500 3,147
Vice President of Operations, Eastern 1998 97,712 17,006 12,500 2,868
Region 1997 84,832 16,964 2,000 2,470
</TABLE>
- ---------------
(1) Salary includes amounts deferred under the Company's 401(k) Plan.
(2) Represents the Company's matching contributions under the Company's 401(k)
Plan.
STOCK OPTIONS GRANTED IN FISCAL 1999
The following table provides information concerning grants of options to
purchase the Company's Common Stock made during the fiscal year ended March 31,
1999 to the Named Officers. No stock appreciation rights were granted during
such fiscal year to the Named Officers.
The Company granted options to purchase 254,900 shares of Common Stock
during the fiscal year ended March 31, 1999. The plan administrator has the
discretionary authority to reprice the options through the cancellation of those
options and the grant of replacement options with an exercise price based on the
fair market value of the option shares on the regrant date. The options have a
maximum term of 10 years measured from the option grant date, subject to earlier
termination in the event of the optionee's cessation of service with the
Company. The plan administrator has the discretion to accelerate the vesting of
options upon a change in control.
The assumed 5% and 10% rates of stock price appreciation are provided in
accordance with rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the future Common Stock price.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock, overall market conditions and the option
holders' continued employment through the vesting period. This table does not
take into account any appreciation in the price of the Common Stock from the
date of grant to the current date. Unless the market price of the Common Stock
appreciates over the option term, no value will be realized from the option
grants made to the Named Officers.
7
<PAGE> 32
All options were granted at an exercise price equal to the fair market
value of the Company's Common Stock as determined by the Board of Directors of
the Company on the date of grant. The exercise price may be paid in cash, check,
promissory note, in shares of Common Stock valued at fair market value on the
exercise date or a broker-assisted cashless exercise procedure. The options vest
with respect to 1/48 of the option shares upon the completion of each month of
service after the option grant date.
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------
NAME GRANTED(#) IN FISCAL 1999 PER SHARE($) DATE 5%($) 10%($)
---- ---------- -------------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
James F. Clouser........... 75,000 29.4% $19.75 08/04/08 $931,550 $2,360,731
David E. Meyer............. 10,000 3.9 19.75 08/04/08 124,207 314,764
Eric W. Beers.............. 10,000 3.9 19.75 08/04/08 124,207 314,764
Eugene C. Davis............ 2,500 1.0 19.75 08/04/08 31,052 78,691
Donald A. Currie........... 2,500 1.0 19.75 08/04/08 31,052 78,691
</TABLE>
- ---------------
OPTION EXERCISES AND FISCAL 1999 YEAR-END VALUES
The following table provides the specified information concerning options
exercised during the fiscal year ended March 31, 1999 and unexercised options
held as of March 31, 1999 by the Named Officers:
AGGREGATED OPTION EXERCISES IN FISCAL 1999
AND FISCAL 1999 YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
VALUE REALIZED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES (MARKET PRICE AT AT FY-END(#) AT FY-END($)(1)
ACQUIRED ON EXERCISE LESS --------------------------- ---------------------------
NAME EXERCISE(#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James F. Clouser.... 145,352 $2,389,778 140,585 139,063 $380,357 $ 0
David E Meyer....... 7,000 121,876 28,507 19,993 101,243 11,883
Eric W. Beers....... 3,000 47,675 25,057 21,943 80,510 14,065
Eugene C. Davis..... 6,000 110,100 14,464 9,536 53,835 14,065
Donald A. Currie.... 1,500 27,000 17,854 10,646 59,977 4,899
</TABLE>
- ---------------
(1) Based on the fair market value of the Company's Common Stock per share at
March 31, 1999 ($9.75) less the exercise price per share payable for such
shares.
EMPLOYMENT AGREEMENTS, SEVERANCE AGREEMENTS
AND CHANGE IN CONTROL ARRANGEMENTS
James F. Clouser entered into an employment agreement with the Company in
June 1999 (the "Employment Agreement"). The following summary of the material
terms of the Employment Agreement is qualified in its entirety by reference to
the copy of the Employment Agreement filed as Exhibit (c)(6) to the Schedule
14D-9 which is incorporated herein by this reference. The Employment Agreement
by its terms, is to take effect the day immediately prior to the Merger and in
the event the Merger Agreement is terminated, the Employment Agreement shall be
null and void. The term of the Employment Agreement is four years (the
"Employment Period"). Under the terms of the Employment Agreement, Mr. Clouser
will be paid an annual base salary of $500,000. If Mr. Clouser is terminated as
a result of disability or death, a lump sum cash payment equal to the base
salary payable for the remainder of the Employment Period will be paid to Mr.
Clouser or his spouse or estate, respectively. If Mr. Clouser is constructively
discharged for any reason
8
<PAGE> 33
other than cause or he quits within 60 days after the first anniversary of the
Merger, Mr. Clouser will receive a lump sum cash payment equal to the base
salary payable for the remainder of the Employment Period and continue to
receive employee benefits for the remainder of the Employment Period. Mr.
Clouser cannot compete with the business of the Company during the Employment
Period, regardless of whether he remains employed with the Company. To the
extent that any payments or distributions made to Mr. Clouser with respect to
the Merger result in an excise tax for him under Section 280G of the Internal
Revenue Code, Mr. Clouser will receive additional payments from the Company to
put him in the same after-tax position as if such excise taxes and any related
taxes did not apply.
In June of 1999, each of D. Patterson Adams, David E. Meyer, Eric W. Beers,
Lisa L. Foster and Carole-Lynn S. Glass entered into a severance agreement with
the Company (the "Two Year Severance Agreements"). The following summary of the
material terms of the Two Year Severance Agreements is qualified in its entirety
by reference to the form of Two Year Severance Agreement filed as Exhibit (c)(7)
to this Schedule 14D-9 and incorporated herein by this reference. The Two Year
Severance Agreement provides that if one of these officers is terminated without
cause or resigns for good reason within 12 months of a change in control, such
officer will receive (i) a severance payment equal to two years of such
officer's most recent base salary, and (ii) to the extent that any of such
officer's options are not vested, such options will become fully vested and
exercisable.
In June of 1999, each of Eugene W. Davis and Donald A. Currie entered into
a severance agreement with the Company (the "One Year Severance Agreements").
The following summary of the material terms of the One Year Severance Agreements
is qualified in is entirety by reference to the form of One Year Severance
Agreement filed as Exhibit (c)(8) to this Schedule 14D-9 and incorporated herein
by this reference. The One Year Severance Agreement provides that if one of
these officers is terminated without cause or resigns for good reason within 12
months of a change in control, such officer will receive (i) a severance payment
equal to one year of such officer's most recent base salary, and (ii) to the
extent any of such officer's options are not vested, such options will become
fully vested and exercisable.
The vesting of the options granted under the 1997 Equity Incentive Plan
accelerates entirely in the event of a change in control. The vesting of the
options granted under the 1997 Stock Plan accelerates entirely in the event of a
change in control if the options are not assumed or substituted with options
having substantially the same terms by the successor corporation or its parent.
The Board of Directors or the Compensation Committee has the discretion to
accelerate the vesting of options granted under the Second Amended and Restated
1986 Stock Option Plan in the event of a change in control. The Named Officers
have been granted options under the three previously described plans.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company's Board of Directors (the
"Committee") has the exclusive authority to establish the level of base salary
payable to the Chief Executive Officer ("CEO") and the other executive officers
of the Company and has the responsibility of approving the individual bonus
programs to be in effect for the CEO and the other executive officers each
fiscal year. In addition, the Committee administers the Company's 1997 Equity
Incentive Plan under which option grants may be made to the CEO and the other
executive officers and the Company's Employee Stock Purchase Plan under which
the employees of the Company, including the CEO and the other executive
officers, may purchase shares of the Company's Common Stock.
For the fiscal year ended March 31, 1999, the process utilized by the
Committee in determining executive officer compensation levels was based on the
subjective judgment of the Committee. Among the factors considered by the
Committee were the recommendations of the CEO with respect to the compensation
of the Company's executive officers. However, the Committee made the final
compensation decisions concerning such officers.
GENERAL COMPENSATION POLICY. The Committee's fundamental policy is to offer
the Company's executive officers competitive compensation opportunities based
upon the financial performance of the Company,
9
<PAGE> 34
each officer's individual contribution to the financial success of the Company
and personal performance and market conditions. It is the Committee's objective
to have a significant portion of each officer's compensation contingent upon the
Company's performance, as well as upon his or her own level of performance.
Accordingly, each executive officer's compensation package consists of: (i) base
salary, (ii) cash bonus awards and (iii) long-term stock-based incentive awards.
BASE SALARY. The base salary for each executive officer is set on the basis
of personal performance and the average salary levels in effect for comparable
positions with companies having total revenues similar to the Company's. Each
individual's base pay is positioned relative to the total compensation package,
including cash bonus incentives and long-term stock-based incentives.
ANNUAL CASH BONUSES. Each executive officer has an established cash bonus
target. The annual pool of bonuses for executive officers is determined on the
basis of personal objectives established for each executive as well as the
Company's achievement of the financial performance targets established at the
start of the fiscal year. Actual bonuses paid reflect an individual's
accomplishment of both functional and corporate objectives.
LONG-TERM INCENTIVE COMPENSATION. During the fiscal year ended March 31,
1999, the Committee, in its discretion, made option grants to the CEO and the
other Named Officers, Messrs. Clouser, Beers, Davis, Meyer and Currie, under the
1997 Equity Incentive Plan as a bonus for their personal contributions towards
the Company. Option grants are generally made at varying times and in varying
amounts in the discretion of the Committee. Typically, the size of each grant is
set at a level that the Committee deems appropriate to create a meaningful
opportunity for stock ownership based upon the individual's position with the
Company, the individual's potential for future responsibility and promotion, the
individual's performance in the recent period and the number of unvested options
held by the individual at the time of the new grant. The relative weight given
to each of these factors will vary from individual to individual at the
Committee's discretion.
Each grant allows the officer to acquire shares of the Company's Common
Stock at a fixed price per share (the market price on the grant date) over a
specified period of time. Each option vests as to 1/48 of the option shares upon
the completion of each month of service following the grant date. Thus, the
vesting of each option is contingent upon the executive officer's continued
employment with the Company. Accordingly, the option will provide a return to
the executive officer only if he or she remains in the Company's employ, and
then only if the market price of the Company's Common Stock appreciates over the
option term.
CEO COMPENSATION. The annual base salary for Mr. Clouser, the Company's
President and CEO, was established by the Committee. The Committee's decision
was made primarily on the basis of Mr. Clouser's personal performance of his
duties. The option for 75,000 Shares was granted to Mr. Clouser as a result of
his significant contributions during the fiscal year ended March 31, 1999. The
option grant made to the CEO during the fiscal year ended March 31, 1999 was
also intended to reflect his years of service with the Company and to place a
significant portion of his total compensation at risk, because the options will
have no value unless there is appreciation in the value of the Company's Common
Stock over the option term.
The remaining components of the CEO's fiscal year incentive compensation
were dependent upon the Company's financial performance as well as personal
objectives and provided no dollar guarantees. The bonus paid to the CEO for the
fiscal year was based on the same incentive plan for all other executive
officers. Each year, the annual incentive plan is reevaluated with a new
achievement threshold and new targets for revenue and profit.
10
<PAGE> 35
TAX LIMITATION. Under the Federal tax laws, a publicly-held company such as
the Company will not be allowed a federal income tax deduction for compensation
paid to certain executive officers to the extent that compensation exceeds $1
million per officer in any year. To qualify for an exemption from the $1 million
deduction limitation, the stockholders were asked to approve a limitation under
the Company's 1997 Equity Incentive Plan on the maximum number of shares of
Common Stock for which any one participant may be granted stock options per
calendar year. Because this limitation was adopted, any compensation deemed paid
to an executive officer when he exercises an outstanding option under the 1997
Equity Incentive Plan with an exercise price equal to the fair market value of
the option shares on the grant date will qualify as performance-based
compensation that will not be subject to the $1 million limitation. Since it is
not expected that the cash compensation to be paid to the Company's executive
officers for the fiscal year ended March 31, 1999 will exceed the $1 million
limit per officer, the Committee will defer any decision on whether to limit the
dollar amount of all other compensation payable to the Company's executive
officers to the $1 million cap.
James R. Yarter
Frederick J. Ruegsegger
11
<PAGE> 36
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 21, 1999, certain information
with respect to Shares beneficially owned by (i) each person who is known by the
Company to be the beneficial owner of more than five percent of the Company's
outstanding Shares, (ii) each of the Company's directors and the executive
officers named in the Summary Compensation Table and (iii) all current directors
and executive officers as a group. Beneficial ownership has been determined in
accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain
Shares may be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of the Shares).
In addition, Shares are deemed to be beneficially owned by a person if the
person has the right to acquire shares (for example, upon exercise of an option
or warrant) within 60 days of the date as of which the information is provided;
in computing the percentage ownership of any person, the amount of Shares is
deemed to include the amount of Shares beneficially owned by such person (and
only such person) by reason of such acquisition rights. As a result, the
percentage of outstanding Shares of any person as shown in the following table
does not necessarily reflect the person's actual voting power at any particular
date.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
AS OF JUNE 21, 1999(1)(2)
--------------------------
NUMBER OF PERCENTAGE
BENEFICIAL OWNER SHARES OF CLASS
---------------- ----------- -----------
<S> <C> <C>
Ion Beam Applications s.a.(3)............................... 3,245,612 40.5%
Chemin du Cyclotron, 3
B-1348 Louvain-La-Neuve
Belgium
KFFP III, L.P., a California limited partnership(4)......... 1,800,000 22.4
405 Alberto Way, Suite 5
Los Gatos, CA 95032
James F. Clouser(5)......................................... 241,284 3.0
Donald A. Currie(6)......................................... 22,512 *
Eric W. Beers(7)............................................ 33,226 *
Eugene C. Davis(8).......................................... 19,256 *
David E. Meyer(9)........................................... 38,423 *
Charles W. King, Jr.(10).................................... 420,962 5.2
Barrick L. Prince........................................... 200 *
Frederick J. Ruegsegger(11)................................. 3,750 *
James R. Yarter(12)......................................... 5,700 *
All current directors and executive officers as a group (12
persons)(13).............................................. 824,236 9.9%
</TABLE>
- ---------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
Shares subject to options held by that person that are currently
exercisable or exercisable within 60 days of June 21, 1999 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purposes of computing percentage ownership of each other person. Except as
indicated in the footnotes to this table and pursuant to applicable
community property laws, the persons named in the table have sole voting
and investment power with respect to all Shares. To the Company's
knowledge, the entities named in the table have sole voting and investment
power with respect to all Shares shown as beneficially owned by them.
(2) Percentage ownership is based on 8,018,820 Shares outstanding on June 21,
1999.
(3) Includes 2,494,312 Shares owned by seven stockholders of the Company (the
"Selling Stockholders") which are subject to a Stockholders' Agreement
dated June 10, 1999 by and among Purchaser, IBA GP, Parent and the Selling
Stockholders. Pursuant to the Stockholders' Agreement, upon the terms and
subject to the conditions therein, the Selling Stockholders have agreed to
validly tender and not withdraw Shares owned by such stockholder pursuant
to the Offer and have granted to Parent: (i) an
12
<PAGE> 37
irrevocable proxy to vote for approval of the transactions contemplated by the
Merger Agreement and to vote against any action or agreement intended or
expected to interfere with such transactions and certain extraordinary corporate
actions of the Company; and (ii) an option, exercisable in limited
circumstances, to purchase all of their Shares (the "Option").
(4) The KFFP III, L.P. is a party to the Stockholders' Agreement and thus all
Shares held by KFFP III, L.P. are subject to the Option. If the Option is
exercised, KFFP III, L.P. would hold no Shares.
(5) Includes 152,710 Shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 21, 1999.
(6) Includes 19,811 Shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of June 21, 1999.
(7) Includes 29,916 Shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of June 21, 1999.
(8) Includes 17,008 Shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of June 21, 1999.
(9) Includes 32,874 Shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of June 21, 1999.
(10) Includes 400,000 Shares held by KFFP II, L.P. a California limited
partnership. Mr. King, a director of the Company, is a general partner of
KFFP II, L.P. Mr. King disclaims beneficial ownership of Shares held by
KFFP II, L.P. except to the extent of his pecuniary interest arising from
his interest in KFFP II, L.P. KFFP II, L.P. is a party to the Stockholders'
Agreement and thus all Shares held by KFFP II, L.P. are subject to the
Option. If the Option is exercised, KFFP II, L.P. would hold no Shares.
(11) Includes 3,600 Shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of June 21, 1999.
(12) Includes 5,700 Shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of June 21, 1999.
(13) Includes 286,992 Shares issuable upon exercise of options that are
currently exercisable or exercisable within 60 days of June 21, 1999 and
400,000 Shares held by KFFP II, L.P., a California limited partnership.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
The Company has leased its Tustin, California facility since April 1980
from Charles King & Associates, an entity of which Charles W. King, Jr., a
director and major stockholder of the Company, is an affiliate. In June 1997,
the Company executed a five-year lease, with a term that expires in the year
2002, that provides for payments of approximately $21,000 per month. Lease
payments were $219,000, $227,000 and $243,000 in fiscal years ended March 31,
1997, 1998 and 1999, respectively.
The Company has leased its Schaumburg, Illinois facility since January 1982
from Charles King & Associates, an entity of which Charles W. King, Jr., a
director and major stockholder of the Company, is an affiliate. In June 1997,
the Company executed a five year lease, with a term that expires in the year
2002, that provides for payments of approximately $13,900 per month. Lease
payments were $253,000, $180,000 and $161,000 in fiscal years ended March 31,
1997, 1998 and 1999, respectively.
Through June 29, 1997 and February 28, 1998, Charles W. King, Jr.
guaranteed bank letters of credit related to industrial revenue bonds ("IRBs")
issued by the Company for approximately $31.5 million and $5.3 million,
respectively, for several of the Company's facilities. Mr. King received no
consideration for the guarantee of these IRBs.
13
<PAGE> 38
The Company used $1.5 million of the net proceeds of the Company's initial
public offering to redeem 15,000 shares of the Company's Series A Preferred
Stock. The Charles W. King, Jr. Revocable Trust, of which Mr. King is the
trustee and beneficiary, was the sole holder of the Series A Preferred Stock.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, including loans between the
Company and its officers, directors, principal stockholders and their affiliates
will be approved by a majority of the Board of Directors, including a majority
of the independent and disinterested outside directors on the Board of
Directors, and will continue to be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than 10% of the outstanding Shares are subject
to the reporting requirements of Section 16(a) of the Exchange Act which require
them to file reports with respect to their ownership of Common Stock and their
transactions in such Common Stock. Based upon the copies of Section 16(a)
reports that the Company received from such persons for their transactions in
the Common Stock and their Common Stock holdings during the fiscal year ended
March 31, 1999, the Company believes that all reporting requirements under
Section 16(a) for such fiscal year were met in a timely manner by its executive
officers, Board members and greater than ten-percent stockholders, except that
Eric W. Beers filed an amended Form 4 for three late transactions and late
transactions were reported on Form 5s, as indicated below. In addition, based
upon the written representations received from one or more of such persons that
no annual Form 5 reports were required to be filed by them for the fiscal year
ended March 31, 1999, the Company believes that no Form 5s had to be filed,
except that the following individuals filed Form 5s to report option grants and,
as indicated, certain other transactions made during the fiscal year ended March
31, 1999: D. Patterson Adams; Thomas J. Balutis; Eric W. Beers (also reported
one late transaction); James F. Clouser (also reported seven late transactions);
Donald A. Currie; Lisa C. Foster (also reported one late transaction); Eugene C.
Davis (also reported one late transaction); Charles W. King, Jr.; David E. Meyer
(also reported two late transactions); Barrick L. Prince; Frederick J.
Ruegsegger; and James R. Yarter.
14
<PAGE> 39
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------
<S> <C>
Exhibit 1 Merger Agreement dated as of June 10, 1999, by and among Ion
Beam Applications s.a., Ion Beam Applications G.P., IBA
Acquisition Corp. and SteriGenics International, Inc.
(incorporated by reference to Exhibit (c)(1) of the Schedule
14D-9)
Exhibit 2 Press Release issued by SteriGenics International, Inc.,
dated June 11, 1999 (incorporated by reference to Exhibit
(a)(3) of the Schedule 14D-9)
Exhibit 3 Letter to Stockholders of SteriGenics International, Inc.
dated June 24, 1999 (incorporated by reference to Exhibit
(a)(6) of the Schedule 14D-9)
Exhibit 4 Opinion of PaineWebber Incorporated dated June 10, 1999
(incorporated by reference to Exhibit (a)(4) of the Schedule
14D-9)
Exhibit 5 Opinion of TM Capital Corp. dated June 10, 1999
(incorporated by reference to Exhibit (a)(5) of the Schedule
14D-9)
Exhibit 6 Employment Agreement dated as of June 10, 1999, among James
F. Clouser and the Company (incorporated by reference to
Exhibit (c)(6) of the Schedule 14D-9)
Exhibit 7 Form of Two Year Severance Agreement between the Company and
certain of its executive officers (incorporated by reference
to Exhibit (c)(7) of the Schedule 14D-9)
Exhibit 8 Form of One Year Severance Agreement between the Company and
certain of its executive officers (incorporated by reference
to Exhibit (c)(8) of the Schedule 14D-9)
</TABLE>
15
<PAGE> 1
(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
INCLUDING THE ASSOCIATED RIGHTS
TO
PURCHASE SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
STERIGENICS INTERNATIONAL, INC.
AT
$27.00 NET PER SHARE
BY
IBA ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
ION BEAM APPLICATIONS S.A.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JULY 15, 1999 (THE "EXPIRATION DATE"), UNLESS THE OFFER IS
EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES OF
COMMON STOCK, TOGETHER WITH THE ASSOCIATED RIGHTS TO PURCHASE SHARES OF SERIES A
JUNIOR PARTICIPATING PREFERRED STOCK, WHICH, WHEN COMBINED WITH THE SHARES
ALREADY OWNED BY PARENT, PURCHASER AND THEIR AFFILIATES, CONSTITUTES A MAJORITY
OF THE TOTAL NUMBER OF SHARES OF STERIGENICS INTERNATIONAL, INC., (THE
"COMPANY") OUTSTANDING ON A DILUTED BASIS (INCLUDING FOR PURPOSES OF SUCH
CALCULATION ALL SHARES ISSUABLE UPON EXERCISE OF ALL VESTED AND UNVESTED STOCK
OPTIONS, AND CONVERSION OF CONVERTIBLE SECURITIES OR OTHER RIGHTS TO PURCHASE OR
ACQUIRE SHARES) AND (2) THE SATISFACTION OR WAIVER OF CERTAIN CONDITIONS TO THE
OBLIGATIONS OF PURCHASER AND THE COMPANY TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING RECEIPT BY PURCHASER AND THE
COMPANY OF CERTAIN GOVERNMENTAL AND REGULATORY APPROVALS.
THE BOARD OF DIRECTORS OF THE COMPANY 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 STOCKHOLDERS OF THE
COMPANY, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
------------------------
IMPORTANT
Any stockholder desiring to tender Shares (as defined herein) should either
(1) complete and sign the Letter of Transmittal, or a facsimile copy thereof, in
accordance with the instructions in the Letter of
<PAGE> 2
Transmittal, mail or deliver it and any other required documents to the
Depositary and either deliver the certificates for such Shares to the Depositary
along with the Letter of Transmittal or tender such Shares pursuant to the
procedure for book-entry transfer set forth in this Offer to Purchase under the
caption "THE TENDER OFFER-2. Procedure For Accepting The Offer And Tendering
Shares" or (2) request such stockholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for the stockholder.
Stockholders having Shares 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 they desire to tender
such Shares.
A stockholder who desires to tender Shares and whose certificates for
Shares are not immediately available, or who cannot comply on a timely basis
with the procedures for book-entry transfer described in this Offer to Purchase,
may tender such Shares by following the procedure for guaranteed delivery set
forth in this Offer to Purchase under the caption "THE TENDER OFFER-2. Procedure
For Accepting The Offer And Tendering Shares."
Questions and requests for assistance, or for additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
or other tender offer materials, may be directed to the Information Agent or the
Dealer Manager at their respective addresses and telephone numbers set forth on
the back cover of this Offer to Purchase. Holders of Shares may also contact
brokers, dealers, commercial banks or trust companies for assistance concerning
the Offer.
------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF THIS TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
------------------------
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Call toll free (888) 293-1889
The date of this Offer to Purchase is June 17, 1999.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
THE TENDER OFFER............................................ 4
1. TERMS OF THE OFFER; EXPIRATION DATE................... 4
2. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING
SHARES................................................ 5
3. WITHDRAWAL RIGHTS..................................... 8
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES......... 9
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES............... 10
6. PRICE RANGE OF THE SHARES............................. 11
7. CERTAIN INFORMATION CONCERNING THE COMPANY............ 11
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT... 13
9. SOURCE AND AMOUNT OF FUNDS............................ 15
10. CERTAIN TRANSACTIONS BETWEEN IBA AND THE COMPANY...... 16
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER AND
THE MERGER............................................ 16
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE
STOCKHOLDERS' AGREEMENT............................... 18
13. DIVIDENDS AND DISTRIBUTIONS........................... 27
14. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; NASDAQ
NATIONAL MARKET AND EXCHANGE ACT REGISTRATION......... 27
15. CERTAIN CONDITIONS OF THE OFFER....................... 28
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS........... 29
17. FEES AND EXPENSES..................................... 31
18. MISCELLANEOUS......................................... 32
SCHEDULE I.................................................. 33
ANNEX A..................................................... 35
</TABLE>
To the Holders of Common Stock of SteriGenics International, Inc.:
INTRODUCTION
IBA Acquisition Corp., a Delaware corporation ("Purchaser"), which is a
wholly-owned, indirect subsidiary of Ion Beam Applications s.a., a Belgian
corporation ("IBA" or "Parent"), hereby offers to purchase all outstanding
shares of common stock, par value $0.001 per share (the "Common Stock"),
together with the associated rights to purchase shares of Series A Junior
Participating Preferred Stock, par value $0.001 per share (the "Rights" and,
together with the Common Stock, the "Shares"), of SteriGenics International,
Inc., a Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which together constitute the "Offer"), at the purchase price of
$27.00 per Share (the "Offer Price"), net to the tendering stockholder in cash.
The Offer is being made pursuant to a Merger Agreement dated as of June 10,
1999 (the "Merger Agreement"), by and among the Company, Parent, Ion Beam
Applications G.P., a Delaware general partnership which owns all of the
outstanding capital stock of Purchaser and of which IBA is the controlling
general partner ("IBA GP") and Purchaser. The Merger Agreement provides, among
other things, that as promptly as practicable following the completion of the
Offer and the satisfaction or waiver of certain conditions, including the
purchase of Shares pursuant to the Offer (the "Consummation" of the Offer) and
the approval and adoption of the Merger Agreement by the stockholders of the
Company, if required by applicable law, Purchaser will be merged with and into
the Company (the "Merger"), with the Company as the surviving corporation (the
"Surviving Corporation"). In the Merger, each issued and outstanding Share
1
<PAGE> 4
(other than Dissenting Shares (as hereinafter defined)) not owned by Parent,
Purchaser, or any of the subsidiaries of Parent (collectively, "Parent
Companies") or shares held by any subsidiaries of the Company will be converted
into and represent the right to receive $27.00 in cash without interest (the
"Offer Price"). See "THE TENDER OFFER-11. Contacts With The Company; Background
Of The Offer And The Merger."
Concurrently with the execution of the Merger Agreement, seven stockholders
(the "Selling Stockholders") entered into a Stockholders' Agreement, dated as of
June 10, 1999, with Parent, IBA GP and Purchaser (the "Stockholders'
Agreement"). The Selling Stockholders beneficially own 2,494,312 shares of
Common Stock representing 31.16% of the total outstanding Shares (excluding
options) or 27.15% of the total outstanding Shares calculated on a diluted
basis. Pursuant to the Stockholders' Agreement, the Selling Stockholders have
agreed, among other things, to validly tender pursuant to the Offer and not
withdraw unless and until the Merger Agreement is terminated in accordance with
its terms without the Shares being purchased in the Offer all Shares that are
owned of record or beneficially by such Selling Stockholders and vote such
Shares in favor of the Merger, in each case upon the terms and subject to
conditions and limitations set forth in the Stockholders' Agreement. The
Stockholders' Agreement is more fully described below. See "THE TENDER OFFER-12.
Purpose Of The Offering; The Merger Agreement; The Stockholders' Agreement."
THE BOARD OF DIRECTORS OF THE COMPANY 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 STOCKHOLDERS OF THE
COMPANY, HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
ACCORDINGLY, SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW ("DGCL") (WHICH
RESTRICTS THE ABILITY OF AN "INTERESTED STOCKHOLDER" FROM ENGAGING IN A
"BUSINESS COMBINATION" WITH A DELAWARE CORPORATION FOR A PERIOD OF THREE YEARS
FOLLOWING THE DATE ON WHICH SUCH STOCKHOLDER BECAME AN "INTERESTED STOCKHOLDER")
IS INAPPLICABLE TO THE OFFER, THE MERGER AGREEMENT AND THE STOCKHOLDERS'
AGREEMENT. SEE "THE TENDER OFFER-16. CERTAIN LEGAL MATTERS; REGULATORY
APPROVALS."
PAINEWEBBER INCORPORATED AND TM CAPITAL CORP., FINANCIAL ADVISORS TO THE
COMPANY, HAVE DELIVERED WRITTEN OPINIONS TO THE COMPANY'S BOARD OF DIRECTORS
DATED JUNE 10, 1999 (THE "OPINIONS"), TO THE EFFECT THAT, AS OF THAT DATE, THE
CONSIDERATION TO BE RECEIVED IN THE OFFER AND THE MERGER BY THE STOCKHOLDERS OF
THE COMPANY IS FAIR FROM A FINANCIAL POINT OF VIEW TO SUCH STOCKHOLDERS. THE
FULL TEXT OF THE OPINIONS WILL BE ATTACHED TO THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9, WHICH IS REQUIRED TO BE
MAILED TO STOCKHOLDERS OF THE COMPANY ON OR BEFORE JUNE 30, 1999. STOCKHOLDERS
ARE URGED TO READ SUCH OPINIONS CAREFULLY AND IN THEIR ENTIRETY FOR ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITS OF THE REVIEW OF PAINEWEBBER INCORPORATED
AND TM CAPITAL CORP.
The Offer is conditioned upon, among other things, the satisfaction or
waiver of certain conditions to the obligations of Purchaser, IBA and the
Company to consummate the transactions contemplated by the Merger Agreement,
including (i) there being validly tendered and not withdrawn prior to the
Expiration Date, that number of Shares which, when combined with the Shares held
by Parent, Purchaser and all of their affiliates, represents at least a majority
of the then outstanding Shares on a diluted basis (including for purposes of
such calculation all shares issuable upon exercise of all vested and unvested
stock options and conversion of convertible securities or other rights to
purchace or acquire shares) (the "Minimum Condition") and
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(ii) receipt by Purchaser, IBA GP, IBA and the Company of certain governmental
and regulatory approvals and certain other conditions. See "THE TENDER OFFER-15.
Certain Conditions Of The Offer."
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S STOCKHOLDERS. ANY SUCH SOLICITATION, IF NECESSARY, WOULD BE MADE
ONLY PURSUANT TO SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF
SECTION 14(a) OF THE SECURITIES EXCHANGE AS AMENDED (THE "EXCHANGE ACT").
The Offer will expire at Midnight, New York City time, on Thursday, July
15, 1999, unless extended.
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the purchase of Shares pursuant to the Offer. However,
any tendering stockholder or other payee who fails to complete and sign the
Substitute Form W-9 that is included in the Letter of Transmittal may be subject
to a required backup federal income tax withholding of 31% of the gross proceeds
payable to such stockholder or other payee pursuant to the Offer. See "THE
TENDER OFFER-5. Certain Federal Income Tax Consequences." Purchaser will pay all
charges and expenses of IBJ Whitehall Bank and Trust Company, as depositary (in
such capacity, the "Depositary"), Bear, Stearns & Co. Inc., as dealer manager
(in such capacity, the "Dealer Manager"), and MacKenzie Partners, Inc., as
Information Agent (in such capacity, the "Information Agent"), incurred in
connection with the Offer. For a description of the fees and expenses to be paid
by Purchaser, see "THE TENDER OFFER-17. Fees and Expenses."
Consummation of the Merger is subject to a number of conditions, including
approval by the stockholders of the Company if such approval is required by
applicable law. If the Minimum Condition is satisfied, Purchaser and Parent
together will have sufficient voting power to approve and adopt the Merger
Agreement and the Merger at a stockholders' meeting without the vote of any
other stockholder of the Company. Under the Delaware General Corporation Law
(the "DGCL"), if, after consummation of the Offer, Purchaser owns at least 90%
of the then outstanding Shares, Purchaser and Parent will be able to cause the
Merger to occur without a vote of the Company's stockholders. If, however, after
consummation of the Offer, the Purchaser owns less that 90% of the then
outstanding Shares, a vote of the Company's stockholders will be required under
the DGCL to approve the Merger.
The Company has informed IBA that as of May 31, 1999, there were 8,005,802
Shares issued and outstanding and 1,182,210 Shares reserved for issuance upon
the exercise of outstanding Company stock options. As of the date hereof, Parent
and its affiliates beneficially own 3,245,612 Shares, taking into account the
751,300 Shares owned by Parent and the 2,494,312 Shares which are the subject of
the proxy and option granted to Parent under the Stockholders' Agreement. Based
on the foregoing, and assuming no additional Shares (or warrants, options or
rights exercisable for, or securities convertible into, Shares) have been issued
(other than Shares issued pursuant to such options and rights referred to
above), if Purchaser were to acquire 3,842,707 Shares pursuant to the Offer
(including the Shares that, pursuant to the Stockholders' Agreement, are
required to be tendered in response to the Offer), the Purchaser and the Parent
together would own a majority of the Shares outstanding on a diluted basis and
the Minimum Condition would be satisfied.
The information contained in this Offer to Purchase concerning the Company
was supplied by the Company. Purchaser takes no responsibility for the
completeness or accuracy of such information. The information contained in this
Offer to Purchase concerning the Offer, the Merger, IBA, IBA GP, Belgabeam SCRL
and Purchaser was supplied by Parent. The Company takes no responsibility for
the completeness or accuracy of such information.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER. ALSO SEE "THE TENDER OFFER-18. MISCELLANEOUS" FOR
INFORMATION REGARDING CERTAIN ADDITIONAL DOCUMENTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE OFFER.
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<PAGE> 6
Unless the context indicates otherwise, references herein to Parent shall
include IBA and all of its subsidiaries including Purchaser.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date and not withdrawn in accordance with
the provisions set forth in this Offer to Purchase under the caption "THE TENDER
OFFER-3. Withdrawal Rights." The term "Expiration Date" shall mean Midnight, New
York City time, on Thursday, July 15, 1999, unless and until Purchaser, subject
to restrictions contained in the Merger Agreement, shall from time to time have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Purchaser, shall expire.
The Offer is subject to certain conditions set forth in "THE TENDER
OFFER-15. Certain Conditions of the Offer," including satisfaction of the
Minimum Condition and the expiration or termination of any waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). If any such condition is not satisfied prior to the expiration of the
Offer, Purchaser may, subject to the terms of the Merger Agreement, (i)
terminate the Offer and return all tendered Shares to tendering stockholders,
(ii) extend the Offer and, subject to withdrawal rights as set forth in "THE
TENDER OFFER-3. Withdrawal Rights," retain all such Shares until the expiration
of the Offer as so extended, (iii) waive such condition (other than the Minimum
Condition) and, subject to any requirement to extend the period of time during
which the Offer is open, purchase all Shares validly tendered and not withdrawn
by the Expiration Date or (iv) delay acceptance for payment of (whether or not
the Shares have theretofore been accepted for payment), or payment for, any
Shares tendered and not withdrawn, subject to applicable law, until satisfaction
or waiver of the conditions to the Offer.
Pursuant to the Merger Agreement, Purchaser may increase the Offer Price
and may make any other changes in the terms and conditions of the Offer,
provided that, unless previously approved by the Company in writing, Purchaser
may not (i) decrease the Offer Price, (ii) change the form of consideration
payable in the Offer, (iii) reduce the number of Shares required to satisfy the
Minimum Condition, (iv) reduce the maximum number of Shares to be purchased in
the Offer, (v) add conditions to the Offer in addition to those set forth in
Article 7 of the Merger Agreement, (vi) otherwise modify or amend those
conditions in a manner that is materially adverse to the holders of the Shares,
or (vii) extend the Expiration Date beyond September 30, 1999 (except to the
extent required to comply with any rule, regulation or interpretation of the
Commission or to satisfy the conditions to the Offer).
Subject to the terms and conditions of the Merger Agreement, Purchaser may,
without the consent of the Company's Board of Directors, from time to time
extend the Expiration Date. Purchaser confirms that its right to delay payment
for Shares that it has accepted for payment is limited by Rule 14e-1(c) under
the Exchange Act, which requires that a tender offeror pay the consideration
offered or return the tendered securities promptly after the termination or
withdrawal of a tender offer. Under no circumstances will interest be paid on
the purchase price for tendered Shares, whether or not Purchaser exercises its
right to extend the Offer.
Subject to the applicable rules and regulations of the Commission,
Purchaser expressly reserves the right, subject to the terms and conditions of
the Merger Agreement, at any time and from time to time, upon the failure to be
satisfied of any of the conditions to the Offer, to (i) terminate or amend the
Offer, (ii) extend the Offer and postpone acceptance for payment of any Shares,
or (iii) waive any condition to completion of the Offer. During any such
extension all Shares previously tendered and not properly withdrawn will remain
subject to such extension and to the Offer, subject further to the right of a
tendering stockholder to withdraw such stockholder's Shares. Parent may not
terminate the Merger Agreement due to a failure to obtain clearance under the
HSR Act until December 31, 1999; provided, however at any time after March 31,
2000,
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<PAGE> 7
the Company may terminate the Merger Agreement due to a failure to obtain
clearance under the HSR Act. In the event that Purchaser waives any of the
conditions set forth in this Offer to Purchase under the caption "THE TENDER
OFFER-15. Certain Conditions Of The Offer," the Commission may, if the waiver is
deemed to constitute a material change to the information previously provided to
the stockholders, require that the Offer remain open for an additional period of
time and/or that Purchaser disseminate information concerning such waiver.
If Purchaser extends the Offer, or if Purchaser (whether before or after
its acceptance for payment of Shares) is delayed in its payment for Shares or is
unable to pay for Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may retain
tendered Shares on behalf of Purchaser, and such Shares may not be withdrawn
except to the extent tendering stockholders are entitled to withdrawal rights as
described in this Offer to Purchase under the caption "THE TENDER OFFER-3.
Withdrawal Rights." However, as described above, the ability of Purchaser to
delay payment for Shares that Purchaser has accepted for payment is limited by
Rule 14e-1(c) under the Exchange Act.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials (including by
public announcement) and extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Such rules generally
provide that the minimum period during which a tender offer must remain open
following a material change in the terms of the offer or 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 changes in the terms or information. In the Commission's
view, an offer should remain open for a minimum of five business days from the
date a material change is first published, sent or given to security holders,
and, if material changes are made with respect to information that approaches
the significance of price and share levels, a minimum of ten business days may
be required to allow for adequate dissemination and investor response. 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 stockholders and for investor response.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement in accordance with the public
announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change) 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
making a release to the Dow Jones News Service.
The Company has provided Purchaser with the Company's stockholder list, a
non-objecting beneficial owners list, and security position listings for the
purpose of disseminating the Offer to holders of Shares. This Offer to Purchase
and the Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares and furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES
Valid Tender of Shares
For a stockholder to validly tender Shares pursuant to the Offer, either
(i) a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or an Agent's Message
(as defined herein) in connection with a book-entry delivery of Shares, and any
other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase, and either
certificates ("Share Certificates") for tendered Shares must be received by
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<PAGE> 8
the Depositary at one of such addresses or such tendered Shares must be
delivered pursuant to the procedure for book-entry transfer set forth below (and
a Book-Entry Confirmation (as defined herein) received by the Depositary), in
each case prior to the Expiration Date, or (ii) the tendering stockholder must
comply with the guaranteed delivery procedures set forth below.
Book-Entry Transfers
The Depositary will establish an account with respect to the Shares at The
Depositary Trust Company (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 Book-Entry Transfer Facility
system may make book-entry delivery of the Shares by causing the Book-Entry
Transfer Facility system to transfer such Shares into the Depositary's account
at a Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedure for such transfer. Although delivery of Shares may be
effected through book-entry transfer at any Book-Entry Transfer Facility, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined herein) in connection with a book-entry transfer, and any other required
documents, must, in any case, be transmitted to, and 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 stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH ITS BOOK-ENTRY PROCEDURES DOES NOT CONSTITUTE VALID DELIVERY TO
THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
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 the
Letter of Transmittal and agrees to be bound by the terms of the Letter of
Transmittal and that Purchaser may enforce such agreement against such
participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND SOLE RISK OF THE TENDERING STOCKHOLDER
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED AT THE DEPOSITARY.
IF DELIVERY IS BY MAIL, THEN INSURED OR REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Signature Guarantees
No signature guarantee on the Letter of Transmittal is required if (i) the
Letter of Transmittal is signed by the registered holder of the Shares (which
term, for purposes of this Section, includes any participant in a Book-Entry
Transfer Facility system whose name appears on a security position listing as
the owner of the Shares) tendered therewith and such registered holder has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on such Letter of Transmittal, or (ii)
such Shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity that is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the Share Certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made to, or Share Certificates not validly
tendered, not accepted for payment or not purchased are to be issued or returned
to, a person other than the registered holder of the Share Certificates, the
tendered Share Certificates must be endorsed in blank or accompanied by
appropriate stock powers, signed exactly as the name of the registered holder
appears on the Share Certificates with the signature on such
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<PAGE> 9
Share Certificates or stock powers guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery
If a stockholder desires to tender Shares pursuant to the Offer and such
stockholder's Share Certificates are not immediately available or the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such Shares may nevertheless be tendered provided that all of the
following guaranteed delivery procedures are duly complied with:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail, telegram or facsimile
transmission) on or prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form
provided by Purchaser; and
(c) the Share Certificates representing all tendered Shares, in proper
form for transfer (or Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three Nasdaq trading
days after the date of such Notice of Guaranteed Delivery. A "Nasdaq
trading day" is any day on which securities are traded on the Nasdaq
National Market.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, facsimile transmission or mail, to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share Certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), or, in the case of
book-entry transfer, an Agent's Message, and (iii) any other documents required
by the Letter of Transmittal. Accordingly, tendering stockholders may be paid at
different times depending upon when Share Certificates, Book-Entry Confirmations
and such other documents are actually received by the Depositary. Under no
circumstances will interest be paid by Purchaser on the purchase price of the
Shares to any tendering stockholders, regardless of any extension of the Offer
or any delay in making such payment.
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 Purchaser in its sole discretion, which determination will be final and
binding. Purchaser reserves the absolute right to reject any or all tenders of
any Shares that it determines are not in proper form or the acceptance for
payment of or payment for which may, in the opinion of Purchaser's counsel, be
unlawful. Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in the tender of any
Shares with respect to any particular stockholder, whether or not similar
defects or irregularities are waived in the case of other stockholders. None of
Purchaser, IBA, the Depositary, the Information Agent, the Dealer Manager or any
other person will be under any duty to give notice of any defects or
irregularities in tenders or incur any liability for failure to give any such
notice. 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 herein, a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
proxies, each with full power of substitution, in the manner set forth in the
Letter of Transmittal, to the full extent of such stockholder's rights with
respect to the Shares
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<PAGE> 10
tendered by such stockholder and accepted for payment by Purchaser (and with
respect to any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after June 10, 1999), effective when,
if and to the extent that Purchaser accepts such Shares for payment pursuant to
the Offer. All such proxies shall be considered coupled with an interest in the
tendered Shares. Upon such acceptance for payment, all prior proxies given by
such stockholder with respect to such Shares accepted for payment or other
securities or rights will, without further action, be revoked, and no subsequent
proxies may be given. Such designees of Purchaser will, with respect to such
Shares for which the appointment is effective, be empowered to exercise all
voting and other rights of such stockholder as they in their sole discretion may
deem proper in respect of any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof. 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.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described herein will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
Backup Federal Income Tax Withholding
To prevent backup federal income tax withholding on payments of cash
pursuant to the Offer, a stockholder (other than certain exempt stockholders,
including, among others, all corporations and certain foreign individuals and
entities) tendering Shares in the offer must provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on a Substitute
Form W-9 and certify under penalties of perjury that such TIN is correct and
that such stockholder is not subject to backup withholding. If a stockholder
does not provide its correct TIN or fails to provide the certification described
herein, under federal income tax laws, the Depositary will be required to
withhold 31% of the amount of any payment made to such stockholder pursuant to
the Offer. All stockholders (other than stockholders providing Form W-8)
tendering Shares pursuant to the Offer should complete and sign the Substitute
Form W-9 included as a part of the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding. Certain
stockholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. See Instruction
10 to the Letter of Transmittal. A stockholder who does not furnish its TIN may
be subject to penalties imposed by the Internal Revenue Service (the "IRS").
Noncorporate foreign stockholders should complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding.
3. WITHDRAWAL RIGHTS
Shares tendered may be withdrawn at any time prior to the Expiration Date.
Thereafter, such tenders are irrevocable, except that they may be withdrawn at
any time after Sunday, August 15, 1999 if they have not been accepted for
payment as provided in this Offer to Purchase.
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 of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn as set forth on such Share
Certificates if different from the name of the person who tendered such Shares.
If Share Certificates 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 furnished to the
Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer set forth in Section 2 above, any notice of withdrawal
must specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with such withdrawn Shares and otherwise comply
with such Book-Entry Transfer Facility's procedures for withdrawal, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.
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<PAGE> 11
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser in its sole discretion,
and its determination will be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent, the Dealer Manager or any other person will
be obligated to give notice of any defects or irregularities in any notice of
withdrawal, nor shall any of them incur any liability for failure to give any
such notice.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by following one of
the procedures described in Section 2 above at any time on or prior to the
Expiration Date.
4. 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 extension or
amendment), promptly after the Expiration Date, Purchaser will accept for
payment, and will pay for, any and all Shares validly tendered on or prior to
the Expiration Date and not properly withdrawn in accordance with Section 3
above. All questions as to the satisfaction of such terms and conditions will be
determined by Purchaser, in its sole discretion, which determination shall be
final and binding. See "THE TENDER OFFER-1. Terms Of The Offering; Expiration
Date" and "THE TENDER OFFER-15. Certain Conditions Of The Offer." Subject to
applicable rules of the Commission and the terms and conditions of the Merger
Agreement, Purchaser expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. Any such delay will be effected in
compliance with Rule 14e-1(c) under the Exchange Act.
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
Share Certificates (or timely Book-Entry Confirmation of the book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer Facility
pursuant to the procedures set forth under Section 2 above), (ii) the Letter of
Transmittal (or 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 (iii) any other documents required by
the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to Purchaser and not
properly withdrawn as, 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. In all cases, upon the terms and subject to the conditions of the Offer,
payment for Shares so accepted for payment will be made by the deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to validly tendering stockholders. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID BY PURCHASER ON THE PURCHASE PRICE OF THE SHARES TENDERED
PURSUANT TO THE OFFER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT. Upon the deposit of funds with the Depositary for the
purpose of making payments to tendering stockholders, Purchaser's obligation to
make such payments shall be satisfied and tendering stockholders 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. Purchaser will pay
any stock transfer taxes with respect to the transfer and sale to it or its
order pursuant to the Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal.
If Purchaser is delayed in its acceptance for payment of, or payment for,
tendered Shares or is unable to accept for payment or pay for such Shares
pursuant to the Offer for any reason, then, without prejudice to Purchaser's
rights under the Offer (but subject to Purchaser's obligations under Rule
14e-1(c) under the Exchange Act to pay for or return the tendered Shares
promptly after the termination or withdrawal of the Offer), the Depositary may,
nevertheless, retain tendered Shares on behalf of Purchaser, and such Shares may
not be withdrawn except to the extent tendering stockholders are entitled to
exercise, and duly exercise, withdrawal rights as described under Section 3
above.
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<PAGE> 12
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or for any reason, Share Certificates for any such Shares will
be returned, without expense, to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedures set forth
under Section 2 above, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility) as promptly as practicable following the
expiration or termination of the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The summary of federal income tax consequences set forth below is for
general information only and is based on Purchaser's understanding of the law as
currently in effect. The tax consequences to each stockholder will depend in
part upon such stockholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States and stockholders who acquired their Shares
through the exercise of an employee stock option or otherwise as compensation.
ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR
TAX CONSEQUENCES OF THE OFFER AND THE MERGER, INCLUDING THE APPLICABILITY AND
EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND
OTHER TAX LAWS AND OF CHANGES IN SUCH TAX LAWS.
The receipt of cash for Shares pursuant to the Offer (or 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.
Generally, for federal tax purposes, a stockholder who receives cash for Shares
pursuant to the Offer (or the Merger) 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 stockholder's adjusted tax basis in
such Shares. Provided that the Shares constitute capital assets in the hands of
the stockholder, such gain or loss will be capital gain or loss, and will be
long term capital gain or loss if the holder has held the Shares for more than
one year at the time of sale. Gain or loss will be calculated separately for
each block of Shares (i.e., a group of Shares with the same tax basis and
holding period) tendered pursuant to the Offer.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the stockholder
provides its TIN and certifies that such number is correct or properly certifies
that it is awaiting a TIN, or unless an exemption applies. A stockholder who
does not furnish its TIN may be subject to a penalty imposed by the Internal
Revenue Service (the "IRS"). See Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an appropriate income tax return.
10
<PAGE> 13
6. PRICE RANGE OF THE SHARES
The Shares are traded on the Nasdaq National Market under the symbol
"STER." The Shares began trading on the Nasdaq National Market on August 13,
1997. The following table sets forth, for the periods indicated, the high and
low closing sales prices per share as reported on the Nasdaq National Market
according to published sources:
<TABLE>
<CAPTION>
CLOSING SALES PRICES
--------------------
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year ended March 31, 1998:
Second Quarter ended September, 30, 1997.................... $17.88 $12.00
Third Quarter ended December 31, 1997....................... $23.00 $16.13
Fourth Quarter ended March 31, 1998......................... $22.00 $16.50
Fiscal Year ended March 31, 1999:
First Quarter ended June 30, 1998........................... $26.25 $19.63
Second Quarter ended September 30, 1998..................... $27.38 $16.63
Third Quarter ended December 31, 1998....................... $26.50 $19.25
Fourth Quarter ended March 31, 1999......................... $25.25 $ 9.50
</TABLE>
On June 10, 1999, the last full day of trading prior to the date of the
first public announcement of Purchaser's intention to commence the Offer, the
last reported sale price of the Common Stock on the Nasdaq National Market was
$19.50 per share. On June 16, 1999, the last full day of trading before the
commencement of the Offer, according to published sources, the last reported
sale price of the Common Stock on the Nasdaq National Market was $25.1825 per
share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
COMMON STOCK.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
General
The Company is a Delaware corporation with its principal offices located at
4020 Clipper Court, Fremont, California 94538.
The following information concerning the Company has been taken from or
based on publicly available documents on file with the Commission, other
publicly available information and information provided by the Company. Although
neither Purchaser nor Parent has any knowledge that would indicate that such
information is untrue, neither Purchaser nor Parent takes any responsibility
for, or makes any representation with respect to, the accuracy or completeness
of such information or for any failure by the Company to disclose events that
may have occurred and may affect the significance or accuracy of any such
information but which are unknown to Purchaser or Parent.
The Company is a provider of high-quality contract irradiation and
sterilization service using primarily gamma technology. The Company has 20 years
of experience in the design and development of gamma irradiation facilities and
equipment. In addition to its Medical Sterilization Division, serving the
healthcare products market, the Company also maintains an Advanced Applications
Division, providing microbial reduction and materials processing services to a
variety of markets such as spices, herbs, botanicals, cosmetics, fresh foods,
nutraceuticals, food and beverage packaging, semiconductor devices, gemstones
and industrial materials. The Company is expanding its network of irradiation
facilities both domestically and internationally. Upon completion of the
Company's Thailand complex and its gamma plants under construction in the United
States, the Company will operate a total of 18 irradiation processing facilities
worldwide.
Available Information
The Shares are registered under the Exchange Act. Accordingly, 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
11
<PAGE> 14
condition and other matters. Certain information, as of particular dates,
concerning the Company's directors and officers (including their compensation,
stock options granted to them and shares held by 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
and annual reports distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information are available
for inspection and copying at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the Commission located in Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of this material may also
be obtained by mail, upon payment of the Commission's customary fees from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains an Internet site on the World Wide Web at
http://www.sec.gov that contains Company reports, proxy statements and other
information, all of which may be printed out via computer with no fees charged.
In addition, such material should also be available for inspection at The Nasdaq
Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Summary Financial Information
The following table sets forth certain summary consolidated financial
information with respect to the Company and its consolidated subsidiaries
derived from the audited financial statements contained in the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1998 (the latest Form
10-K on file for the Company with the Commission) and the unaudited financial
statements contained in the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1998 (the latest Form 10-Q on file for the Company
with the Commission). More comprehensive financial information is included in
such reports and other documents filed by the Company with the Commission, and
the following summary is qualified in its entirety by reference to such
documents (which may be inspected and obtained as described above), including
the financial statements and related notes contained therein. Neither Parent nor
Purchaser assumes any responsibility for the accuracy of the financial
information set forth below.
THE COMPANY AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED MARCH 31, DECEMBER 31,
------------------------------ --------------------
1998 1997 1996 1998 1997
-------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Revenues.............................. $ 46,955 $37,668 $30,241 $ 40,798 $ 33,871
Cost of revenues...................... 24,231 20,245 16,978 20,660 18,019
-------- ------- ------- -------- --------
22,724 17,243 13,263 20,138 15,852
Costs and expenses:
General and administrative.......... 7,850 6,345 5,213 6,511 5,048
Marketing and selling............... 3,497 2,482 1,761 2,935 2,533
Research, development and
engineering...................... 1,229 1,381 890 953 914
-------- ------- ------- -------- --------
12,576 10,208 7,864 10,399 8,495
-------- ------- ------- -------- --------
Income from operations................ 10,148 7,035 5,399 9,739 7,357
Other income (expense):
Interest income..................... 835 343 114 1,394 540
Interest expense.................... (2,316) (2,179) (1,960) (1,693) (1,908)
Write-down of investments in joint
ventures......................... -- -- -- -- --
Other income........................ 47 115 47 77 32
-------- ------- ------- -------- --------
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED MARCH 31, DECEMBER 31,
------------------------------ --------------------
1998 1997 1996 1998 1997
-------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income (loss) before provision for
income taxes, equity in joint
ventures and discontinued
operations.......................... 8,714 5,314 3,600 9,517 6,021
Provision for income taxes............ 3,408 2,099 1,448 3,746 2,356
-------- ------- ------- -------- --------
Income (loss) before equity in joint
ventures and discounted
operations.......................... 5,306 3,215 2,152 -- --
-------- ------- ------- -------- --------
Equity in net loss of joint
ventures............................ -- -- -- -- --
Income (loss) from continuing
operations.......................... 5,306 3,215 2,152 -- --
Discontinued operations:
Income (loss) from discontinued
operations....................... -- -- -- -- --
Loss on disposition of discontinued
operations....................... -- -- -- -- --
Net income (loss)..................... $ 5,306 $ 3,215 $ 2,152 $ 5,771 $ 3,665
======== ======= ======= ======== ========
Pro forma basic net income per
share(1)............................ $ 0.86 $ 0.66 $ -- $ -- $ 0.63
======== ======= ======= ======== ========
Basic net income per share............ -- -- -- $ 0.74 --
-------- ------- ------- -------- --------
Shares used in computing pro forma
basic net income per share(1)....... 6,181 4,861 $ -- $ -- 5,846
======== ======= ======= ======== ========
Diluted net income per share(1)....... $ 0.79 $ 0.62 $ -- $ 0.69 $ 0.58
======== ======= ======= ======== ========
Shares used in computing diluted net
income per share(1)................. 6,711 5,165 $ -- 8,360 6,350
======== ======= ======= ======== ========
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............. $ 12,660 $ 1,957 $ 9,906 $ 33,641 $ 22,183
======== ======= ======= ======== ========
Working capital (deficit)............. $ 29,785 $(3,047) $ 3,329 $ -- $ --
Total assets..................... 130,675 91,667 84,729 134,974 121,486
Total liabilities................ 60,984 59,187 55,464 57,740 63,329
Redeemable preferred stock............ -- 1,500 1,500 -- --
Stockholders' equity.................. 69,691 30,980 27,765 77,054 58,157
</TABLE>
- ---------------
(1) Basic net income per share is computed using the weighted average number of
shares outstanding during the period, except as noted in the notes to
Consolidated Financial Statements contained in the Company's publicly filed
quarterly and annual reports. Pro forma basic net income per share is
calculated as for basic net income per share, but assumes conversion of all
convertible preferred stock, which converted automatically in the initial
public offering, even if antidilutive. Diluted net income per share includes
potential common shares when dilutive, from stock options (using the
treasury stock method) and from convertible preferred stock (using the
converted method).
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT
General
IBA is a world leader in the design and manufacture of particle
accelerators for the medical and industrial sectors. Since its creation in 1986,
IBA has designed approximately ten types of high performance accelerators which
are the standard in their respective markets. Several units of each model are
either in operation or being installed in seventeen countries on four
continents. IBA's products are used in research, medicine and industry. The
principal executive offices of IBA are located at Chemis du Cyclotron 3, B-1348
Louvain-la-Neuve, Belgium.
The Purchaser, a Delaware corporation, was recently incorporated for the
purpose of making the Offer for the Shares of the Company. Purchaser has not
conducted any other business. The principal executive offices of
13
<PAGE> 16
Purchaser are located at Chemin du Cyclotron, 3, B-1348 Louvain-la-Neuve,
Belgium. All outstanding shares of common stock of Purchaser are directly owned
by IBA GP.
IBA GP, a Delaware general partnership, the controlling general partner of
which is Parent, was formed to hold the shares of all of the U.S. operating
subsidiaries of Parent, including Purchaser. Belgabeam SCRL ("Belgabeam"), the
largest single shareholder of Parent, is a Belgian corporation owned primarily
by employees of Parent. It has its principal business and address at Chemin du
Cyclotron, 3, B-1348 Louvain-la-Neuve, Belgium.
The name, business address, present principal occupation or employment,
five-year employment history and citizenship of each of the directors and
executive officers of Purchaser, Parent and Belgabeam SCRL and the directors and
officers of the partners of IBA GP, as well as the name, principal business and
address of the corporation or other organization in which such present
occupation or employment is carried on are set forth in Schedule I hereto.
Parent's shares have been quoted on the First Market of the Brussels Stock
Exchange since June 22, 1998 and in March 1999 the Parent's share listing was
transferred from the Brussels Stock Exchange's double-fixing market to the
continuous quote market, where quotes are made without interruption. As on June
14, 1999, the Parent's common stock was traded at approximately U.S.$61.50 per
share.
On December 22, 1998, Parent purchased Mediflash Holding AB, a Swedish
group whose major subsidiaries are Scanditronix Medical AB ("Scanditronix") and
Scandiflash. Scanditronix manufactures a large number of products which are
complementary to those manufactured by Parent, such as electron-beam systems for
on-line sterilizations, high-end conventional radiotherapy systems and dosimetry
systems used for the measurement of doses given in radiotherapy. Scandiflash
carries out mechanical services, and manufactures and markets industrial X-ray
imaging systems.
On May 10, 1999 Parent acquired Radiation Dynamics Inc, a wholly-owned
subsidiary of Sumitomo Heavy Industries, which is a well-established company in
the field of high-power low-energy e-beam accelerators used for heat shrinking
and polymer modification applications in the wire, cable, tubing, tire, film and
foam industries.
On May 15, 1999, Parent acquired Griffith Micro Science International, Inc.
("GMS"), a world leader in medical device sterilization. GMS is headquartered in
Oak Brook, Illinois and is active in carrying out sterilization management on
behalf of other companies. GMS employs approximately 460 people and has a global
presence with 19 sterilization centers located in the United States, Canada,
Mexico, Belgium, France, United Kingdom, The Netherlands and Germany. These
centers offer sterilization management services largely to medical device
manufacturers and also provide laboratory, consultancy management and logistical
services. GMS has been active for 60 years, mainly utilizing sterilization by
ethylene oxide, which is one of the two major medical sterilization markets.
Markets are differentiated by the kind of technology used for such
sterilization: treatment by ethylene oxide ("EtO"), and by two forms of
radiation: cobalt irradiation and, more recently electron beams/X-rays.
Financial Information for Parent
Parent is exempt from the informational filing requirements of the Exchange
Act. Parent is listed and files financial and other information pursuant to the
requirements of the Brussels Stock Exchange. In May 1999 Parent completed three
acquisitions of privately-held U.S. corporations, and as a result of such
acquisitions, Parent's operations have significantly expanded. Accordingly,
Parent believes that its audited financial statements dated as of December 31,
1998, prepared in accordance with Belgian GAAP and filed with the Brussels Stock
Exchange, would not accurately reflect Parent's current consolidated financial
position. Moreover, because Parent has received a firm loan committment for the
funds necessary to pay for the Shares and the related fees, and expenses of the
Offer, Parent believes that information about its financial condition is not
material to a decision by a stockholder of the Company whether to sell, transfer
or hold any Shares.
14
<PAGE> 17
Parent has not been required to prepare, and has not prepared, consolidated
financial statements reflecting the financial performance of the corporations
acquired, combined with its own performance.
Interest in Shares; Contracts and Relationships With Respect to Company
Securities
As of June 10, 1999, Parent may be deemed to beneficially own in the
aggregate 3,245,612 Shares, representing approximately 40.54% of the outstanding
Shares as at May 31, 1999. Of the 3,245,612 Shares beneficially owned by Parent,
Parent possesses the sole power to dispose of, direct the disposition of and
vote 751,300 Shares (which Parent acquired in open market purchases in March
1999), and possesses the shared power (with the Selling Stockholders) to dispose
of, direct the disposition of and vote 2,494,312 Shares. Belgabeam's beneficial
ownership is indirect through Parent. Parent acquired 751,300 Shares in the
following open market transactions:
<TABLE>
<CAPTION>
DATE NO. OF SHARES PRICE PER SHARE WHERE/HOW EFFECTED
---- ------------- --------------- --------------------
<S> <C> <C> <C>
3/9/99 330,000 $ 10.25 Open Market Purchase
3/11/99 204,600 $10.212688 Open Market Purchase
3/12/99 133,400 $ 11.1475 Open Market Purchase
3/15/99 3,000 $ 11.3125 Open Market Purchase
3/18/99 45,500 $ 11.4945 Open Market Purchase
3/19/99 34,800 $ 11.50 Open Market Purchase
</TABLE>
Except as described in this Offer to Purchase, none of Purchaser, Parent
or, to the best of their knowledge, any of the persons listed on Schedule I or
any associate or wholly-owned or majority-owned subsidiary of the Purchaser,
Parent or any of the persons so listed, beneficially owns or has a right to
acquire directly or indirectly any Shares. Except as described in this Offer to
Purchase, none of Purchaser, Parent or, to the best of their knowledge, any of
the persons or entities referred to above, or any of the respective executive
officers, directors or subsidiaries of any of the foregoing, has effected any
transactions in the Shares during the past sixty (60) days. Philippe Janssens de
Varebeke, who since June 16, 1999 is no longer a member of the Board of
Directors of Parent made the following open market purchases of Common Stock of
the Company on the following dates: 2,000 shares on April 12, 1999 at a price of
$10.25 per share; 7,800 on June 1, 1999 at a price of $16.32 per share and 2,300
shares on June 2, 1999 at a price of $17.62 per share.
Except as described elsewhere in this Offer to Purchase, none of Purchaser,
Parent or, to the best of their knowledge, any of the persons listed on Schedule
I, has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including but not limited
to contracts, arrangements, understandings or relationships concerning the
transfer or voting of such securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or the
giving or withholding of proxies.
9. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser and Parent to consummate
the Offer and the Merger (including the cash out of stock options as described
in Section 12) and to pay related fees and expenses is estimated to be
approximately $220 million. The required funds will be provided to Purchaser by
Parent, indirectly via IBA GP through loans, advances or capital contributions.
Such funds are expected to be made available pursuant to a $220 million
loan facility (the "Facility") between the Parent and Bank Brussels Lambert S.A.
(the "Lender"). The Parent has received a commitment letter from the Lender
whereby the Lender agreed that it will provide the Facility. A copy of this
letter has been filed with the Commission as Exhibit 11 (b) to the Schedule
14D-1. Such borrowings will be secured by Parent's pledge of certain accounts
maintained by Parent with the Lender and the 751,300 Shares currently owned by
Parent and any Shares acquired pursuant to the Offer and will be available for
drawdown, in one advance, at any time to and including December 31, 1999. The
loan will be repayable in full on June 30, 2000, and will bear interest, payable
monthly, at the rate equal to the relevant one-month London Interbank Offered
15
<PAGE> 18
Rate plus 1.00% per annum. The Facility will include other provisions customary
for this type of facility. Parent has not yet determined its plans for
refinancing the borrowings under the Facility.
Neither the Offer nor the Merger are conditioned upon Purchaser or Parent
obtaining financing.
10. CERTAIN TRANSACTIONS BETWEEN IBA AND THE COMPANY
In December 1998, the Company purchased irradiation equipment from Parent
valued at between $3 million and $5 million.
Except as set forth in this Offer to Purchase, since April 1, 1996, none of
Purchaser, Parent or, to the best of their knowledge, any of the persons listed
on Schedule I, has had any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that are
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
April 1, 1996 there have been no contacts, negotiations or transactions between
any of Parent, the Purchaser or, to the best of their knowledge, any of the
persons listed on Schedule I, on the one hand, and the Company or its
affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER AND THE MERGER
On October 28, 1998, James F. Clouser, Chief Executive Officer of the
Company and Pierre Mottet, Chief Executive Officer of Parent met in Phoenix,
Arizona to discuss various subjects, including the possible purchase of
equipment from the Parent by the Company. They also generally discussed the
possibility of combining the Parent and the Company.
In December 1998 the Company entered into an agreement to purchase certain
irradiation equipment from the Parent.
On January 7, 1999, IBA retained Bear, Stearns International Limited ("Bear
Stearns") as exclusive financial advisor. Bear Stearns and IBA subsequently
conducted a review of IBA's strategy including, among other things, a review of
potential acquisitions. The Company had previously retained PaineWebber
Incorporated ("PaineWebber") and TM Capital Corporation ("TM Capital") as
financial advisors in connection with evaluating potential strategic
transactions.
On January 25, 1999, Mr. Clouser, and Mr. Mottet and Yves Jongen the
President of the Parent met in Hayward, California and had preliminary
discussions concerning a potential acquisition of the Company by the Parent. On
February 2, 1999, the Company provided Parent with a non-disclosure and
standstill agreement. In the course of those discussions Mr. Clouser indicated
that the Company might be willing to consider a sale of the Company and
suggested a valuation in excess of $30 per share.
During February 1999, Mr. Mottet and Mr. Clouser also exchanged e-mails
regarding potential synergies in the business.
On March 5, 1999, Mr. Mottet informed Mr. Clouser that the Parent did not
wish to pursue an acquisition of the Company and did not sign the non-disclosure
agreement.
In early March 1999, following a significant decline in the trading price
of the Company's shares of Common Stock, Parent purchased in the open market
751,300 shares of the Company's Common Stock, which represents approximately
9.4% of the currently outstanding Shares.
On March 17, 1999, Mr. Mottet contacted Mr. Clouser, who was then at a
business meeting in Australia, to discuss Parent's recent acquisition of its
stake in the Company. Mr. Mottet confirmed to Mr. Clouser that, though Parent
had previously evaluated a potential acquisition of the Company, Parent's recent
stake in the Company was acquired for investment purposes and that there were no
plans to increase Parent's stake in the Company.
16
<PAGE> 19
On April 15, 1999, Parent signed a definitive agreement to acquire all of
the outstanding capital stock of Griffith Micro Sciences International, a
Chicago-based Eto sterilization services company.
On April 16, 1999, Parent issued a press release announcing the signing of
the agreement to acquire Griffin Micro Sciences International.
On April 20, 1999, Mr. Clouser contacted Mr. Mottet to advise him that,
following the announcement of Parent's definitive agreement to acquire Griffith
Micro Sciences, a number of parties had approached the Company and that the
willingness of the Company to consider these approaches might eventually lead to
a potential sale.
On April 20, 1999, PaineWebber contacted Bear Stearns and confirmed that
the Company would be interested in pursuing a potential business combination
with the Parent.
On May 13, 1999, Mr. Mottet met with Mr. Clouser in Washington, D.C. and
advised Mr. Clouser that the Parent was interested in conducting a preliminary
evaluation of a potential acquisition of the Company by Parent. Subsequent
discussions took place between Parent, the Company and their financial advisors,
which led to the execution on May 17, 1999 of a non-disclosure agreement (the
"Confidentiality Agreement").
From May 20 to May 23, 1999, associates of Parent's legal counsel, Dorsey &
Whitney LLP, conducted preliminary due diligence of the Company at the law
offices of Gunderson, Dettmer, Stough, Villeneuve, Franklin & Hachigian, LLP
("Gunderson, Dettmer") the Company's legal counsel. The due diligence consisted
mainly of the review of publicly available documents.
On May 26, 1999, Mr. Clouser and Mr. Mottet, Bear Stearns, PaineWebber and
TM Capital met in New York. On this occasion, the Company made available to
Parent certain confidential non-public information. Parent performed a limited
due diligence investigation of the Company through discussions with Mr. Clouser
and the Company's financial advisors about the business and financial condition
of the Company.
On May 28, 1999, PaineWebber contacted Bear Stearns and indicated that the
Company would not consider a possible sale of the Company unless the price was
in excess of $25 per share.
On June 2, 1999, Mr. Mottet informed Mr. Clouser of Parent's willingness to
pursue acquisition negotiations at a price of $25.00 per share. Mr. Clouser
informed Mr. Mottet that the price was below what had been indicated by another
potential bidder. Mr. Clouser and Mr. Mottet discussed having a meeting in New
York on June 9, 1999 but Mr. Clouser asked Mr. Mottet to consider increasing his
price.
On June 3, 1999 Bear, Stearns had conversations with PaineWebber to discuss
the process for beginning negotiations. On June 4, 1999 Mr. Mottet called to
inform Mr. Clouser that the Parent would be willing to pursue negotiations based
on the price of $27.00 per share assuming that the negotiations could proceed
quickly. Mr. Mottet also informed Mr. Clouser that Parent would be willing to
pursue such negotiations only if the Selling Stockholders were willing to
execute an agreement with Parent which gave Parent an option to purchase the
shares owned by the Selling Stockholders. On the same day Bear Stearns contacted
PaineWebber to confirm the $27 per share price and request an exclusive
negotiating period. PaineWebber rejected any negotiating exclusivity. Based on
these conversations, it was agreed that negotiations could start in New York on
June 7, 1999.
On June 5, 1999, Mr. Mottet informed Mr. Clouser that the $27 per share
offer would be rescinded if negotiations were not accelerated.
On June 5, 1999, Mr. Clouser agreed to provide initial comments on the
documents on June 6 and to meet in New York on the evening of June 7, 1999 to
commence negotiations. Later that day counsel for the Parent delivered initial
drafts of the Merger Agreement and the Stockholders' Agreement to counsel for
the Company.
On June 6, 1999 counsel for the Company provided initial comments in the
documents to counsel for the Parent. On June 7, 1999, counsel for the Company
provided detailed comments on the Merger Agreement draft.
17
<PAGE> 20
On June 8, 1999, Parent's Board of Directors approved the proposal to
acquire the Company at a purchase price of $27.00 per share and negotiations of
the Merger Agreement and Stockholders' Agreement were initiated. The Company,
its counsel and financial advisors met with Parent, its counsel and financial
advisors to negotiate the Merger Agreement at various times on June 8, 9 and 10.
On June 9 and June 10, 1999, counsel for Parent conducted further due
diligence of the Company at the offices of counsel for the Company.
On June 9, 1999, Mr. Clouser advised Mr. Mottet that the Company had
received a higher bid and requested that the Parent increase its bid. Mr. Mottet
declined to increase the Parent's offer price and sought to accelerate execution
of the Merger Agreement and Stockholders' Agreement. PaineWebber and S G Cowen
Securities Corporation, which had also been retained as a financial advisor to
the Company contacted Bear Stearns to seek an increase in the Parent's offer
price and to terminate any further due diligence of the Company by the Parent.
On June 10, 1999, prior to a special meeting of Company's board of
directors, Mr. Clouser once again contacted Mr. Mottet to seek an increase the
offer price. Once again Mr. Mottet declined.
On June 10, 1999, Bear Stearns and Arthur Andersen performed limited due
diligence on behalf of the Parent, meeting with members of the Company's
management and PaineWebber at the offices of counsel for the Company.
The Company has informed Parent that on June 10, 1999, the Company's Board
of Directors held a special meeting to consider and evaluate Parent's proposed
offer and the Merger Agreement as well as a competing offer. The Company's Board
of Directors approved Parent's proposal to acquire the Company at a purchase
price of $27.00 per share as well as the Merger Agreement.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDERS' AGREEMENT
Purpose and Structure
The purpose of the Offer is for IBA to acquire the entire equity interest
in the Company not held by IBA or its affiliates. The purpose of the Merger is
for IBA to acquire all of the equity interest in the Company not acquired
pursuant to the Offer. Upon consummation of the Merger, Purchaser, an indirect
wholly- owned subsidiary of IBA, will merge with and into the Company. The
acquisition of equity in the Company has been structured as a cash tender offer
followed by a merger in order to provide a prompt transfer of ownership of the
equity interest in the Company from the Company's public stockholders to IBA and
to provide them with cash for all of their Shares. In the Merger, each
outstanding Share (except for Shares owned by IBA, Purchaser or any subsidiary
of IBA, Purchaser or the Company) will be converted into the right to receive
the Offer Price, net to the holder in cash, without interest.
Under the DGCL, the approval of the Board of the Company and, under certain
circumstances, the affirmative vote of the holders of the majority of the
outstanding Shares is required to approve and adopt the Merger Agreement and the
Merger. If Purchaser acquires a number of shares sufficient to satisfy the
Minimum Condition, Purchaser and Parent together will have sufficient voting
power to approve and adopt the Merger Agreement and the Merger at a
stockholders' meeting without the vote of any other stockholder of the Company.
In the Merger Agreement, the Company has agreed to take all action
necessary to convene a special meeting of its stockholders as promptly 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 under the DGCL.
Plans for the Company
Except as described in this Offer to Purchase, the Parent and the Purchaser
have no present plan or proposals, that would result in any extraordinary
corporate transaction, such as a merger, reorganization or liquidation or sale
or transfer of a material amount of assets, involving the Company or any of its
subsidiaries
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or any internal changes in the Company's corporate structure or business or any
change in its present Board of Directors or management.
The Merger Agreement
The following description of certain provisions of the Merger Agreement is
presented only as a summary and is qualified in its entirety by reference to the
Merger Agreement, a copy of which is included as an exhibit to the Schedule
14D-1.
The Offer. The Merger Agreement provides for the making of the Offer by
Purchaser for the purchase of the Shares. Purchaser's obligation to accept the
Shares tendered to it shall be subject to the satisfaction of certain conditions
(see "THE TENDER OFFER-15. Certain Conditions of the Offer"), as provided in the
Merger Agreement. Purchaser may waive any condition to the Offer, increase the
Merger Price and may make any other changes in the terms and conditions of the
Offer, provided that, unless previously approved by the Company in writing;
Purchaser may not (i) decrease the Offer Price, (ii) change the form of
consideration payable in the Offer, (iii) reduce the number of Shares required
to satisfy the Minimum Condition, (iv) reduce the maximum number of Shares to be
purchased in the Offer, (v) add conditions to the Offer in addition to those set
forth in Article 7 of the Merger Agreement, (vi) otherwise modify or amend those
conditions in a manner that is materially adverse to the holders of the Shares,
or (vii) extend the Expiration Date beyond September 30, 1999 (except to comply
with any rule, regulation or interpretation of the Commission or to satisfy the
conditions to the Offer).
The Board. The Merger Agreement provides that promptly after the close of
the Offer and the purchase of Shares pursuant thereto, Purchaser will be
entitled to designate a majority of the Board of Directors. The Company will,
upon request from Purchaser, use its best efforts either to increase the size of
the Board of Directors (subject to the provisions of the Company's Certificate
of Incorporation) or to secure the resignation of such number of Directors as is
necessary to enable Purchaser's designees to be elected to the Board of
Directors and to use its best efforts to cause such designees to be so elected
and to constitute at all times after the expiration date of the Offer (the
"Tender Offer Purchase Time") a majority of the Board of Directors.
Notwithstanding the foregoing, the Company shall use its reasonable efforts to
encourage James F. Clouser and Fred Reugsegger to remain members of the Board of
Directors until the Effective Time as defined below. The Company shall promptly
take all actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder to enable Purchaser's designees to be elected to
the Board of Directors. Purchaser will supply the Company any information with
respect to its nominees, officers, directors and affiliates required by Section
14(f) of the Exchange Act and Rule 14f-1 thereunder.
Following the appointment of the Purchaser's designees to the Board of
Directors and prior to the Effective Time, any amendment or termination of the
Merger Agreement, any extension of the performance or waiver of the obligations
or other acts of Parent, IBA GP or Purchaser, or waiver of the Company's rights
under the Merger Agreement, will require the concurrence of a majority of the
directors who were directors of the Company before the appointment of
Purchaser's designees.
The Merger. At the Effective Time and upon the terms and subject to the
conditions of the Merger Agreement and in accordance with the DGCL, Purchaser
shall be merged with and into the Company (the "Merger"). Following the Merger,
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Purchaser shall cease. The
closing of the Merger will take place at a time (the "Closing Time") and on a
date which shall be no later than the second business day after satisfaction of
all applicable conditions set forth in the Merger Agreement, unless another
time, date or place is agreed to in writing. Subject to the terms and conditions
set forth in the Merger Agreement, a certificate of merger (the "Merger
Certificate") shall be duly executed and acknowledged by Purchaser and the
Company and thereafter delivered at the Closing Time to the Secretary of State
of the State of Delaware, for filing pursuant to the DGCL. The Merger shall
become effective at such time as a properly executed and certified copy of the
Merger Certificate is duly accepted for record by the Secretary of State of the
State of Delaware for filing pursuant to the DGCL, or such later time as
Purchaser and the Company may agree upon and set forth in the Merger Certificate
(not exceeding 30 days after the Merger Certificate is accepted for
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filing; the time the Merger becomes effective being referred to herein as the
"Effective Time"). Among other consequences of the Merger, at the Effective Time
all the properties, rights, privileges, power and franchises of the Company and
Purchaser shall vest in the Surviving Corporation and all debts, liabilities and
duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
The Certificate of Incorporation of the Company in effect at the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
until amended in accordance with applicable law. The Bylaws of the Company in
effect at the Effective Time shall be the Bylaws of the Surviving Corporation
until amended in accordance with applicable law. The directors and officers of
Purchaser at the Effective Time shall be the initial directors and officers of
the Surviving Corporation, each to hold office in accordance with the charter
and Bylaws of the Surviving Corporation until the next annual meeting of
stockholders and until each such director's successor is duly elected or
appointed and qualified, each such officer's successor is duly appointed, as
applicable.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than (i) Shares held by any of the Company's
subsidiaries, (ii) Shares held by Parent, IBA GP, Purchaser or any of their
affiliates and (iii) Dissenting Shares (defined herein)) shall, together with
associated Rights by virtue of the Merger, and without any action on the part of
Purchaser, the Company or the holder thereof, be converted into and shall have
the right to receive the Offer Price, without interest (the "Cash Merger
Consideration"). However, if between the date of this Agreement and the
Effective Time, the Shares shall have been changed into a different number of
shares or a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
then the Cash Merger Consideration contemplated by the Merger shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares. At
the Effective Time, each Share, then owned by Parent, IBA GP, Purchaser, the
Company or any direct or indirect wholly-owned subsidiary of Parent, IBA GP,
Purchaser or the Company shall, by virtue of the Merger, be canceled and retired
and will cease to exist and no payment shall be made without respect thereto. At
the Effective Time, each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one fully-paid and non-assessable share of common stock, par value
$0.001 per share, of the Surviving Corporation.
As of the Effective Time, Purchaser shall deposit with such agent or agents
as may be appointed (the "Payment Agent") for the benefit of the holders of
Shares the amount of cash necessary to pay the Cash Merger Consideration (such
cash is hereinafter referred to as the "Merger Fund") payable in exchange for
outstanding Shares.
At the Effective Time, each outstanding option to purchase Shares (a
"Company Stock Option," or collectively, "Company Stock Options") issued
pursuant to the Company's 1997 Equity Incentive Plan and its Second Amended and
Restated 1986 Stock Option Plan (each a "Company Option Plan" or collectively,
"Company Option Plans") shall vest in full and the Surviving Corporation shall
pay to the holder of each outstanding Company Stock Option an amount equal to
the excess, if any, of the Offer Price over the exercise price per Share of such
Company Stock Option, less the amount of taxes required to be withheld under
U.S. federal, state or local laws and regulations, multiplied by the number of
Shares subject to such Company Stock Option.
Representations and Warranties. The Merger Agreement contains certain
customary representations and warranties of the parties thereto. These include
representations and warranties of the Company with respect to corporate
existence and power, capitalization, subsidiaries, corporate authorization with
respect to the Merger Agreement, reports filed with the Commission, governmental
approvals, financial statements, litigation, Year 2000 compliance, amendment to
the Rights Agreement (as defined hereinafter), applicability of state takeover
statutes and other matters. Purchaser and IBA have also made certain
representations and warranties with respect to corporate existence and power,
corporate authorization with respect to the Merger Agreement, government
consents and approvals, and the availability of funds to finance the Offer and
the Merger.
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Interim Operations. The Company has agreed that, from the date of the
Merger Agreement until the Closing Time, unless the Parent has consented thereto
in writing, the Company shall, and shall cause each of its subsidiaries to (a)
conduct its business and operations only in the ordinary course of business
consistent with past practice; (b) use reasonable efforts to preserve intact the
business, organization, goodwill, rights, licenses, permits and franchises of
the Company and its subsidiaries and maintain their existing relationships with
customers, suppliers and other persons having business dealings with them, the
loss of any of which would be reasonably likely to result in a material adverse
effect on the Company; (c) use reasonable efforts to keep in full force and
effect adequate insurance coverage and maintain and keep its properties and
assets in good repair, working order and condition, normal wear and tear
excepted; (d) not amend or modify its respective charter or certificate of
incorporation, by-laws, or other charter or organization documents; (e) not
authorize for issuance, issue, sell, grant, deliver, pledge or encumber or agree
or commit to issue, sell, grant, deliver, pledge or encumber any shares of any
class or series of capital stock of the Company or any of its subsidiaries or
any other equity or voting security or equity or voting interest in the Company
or any of its subsidiaries, any securities convertible into or exercisable or
exchangeable for any such shares, securities or interests, or any options,
warrants, calls, commitments, subscriptions or rights to purchase or acquire any
such shares, securities or interests (other than issuances of Shares upon
exercise of Company Stock Options as then in effect granted to directors,
officers, employees and consultants of the Company prior to the date of the
Merger Agreement); (f) not (i) split, combine or reclassify any shares of its
stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of its stock, (ii) solely
in the case of the Company, declare, set aside or pay any dividends on, or make
other distributions in respect of, any of the Company's stock, or (iii)
repurchase, redeem or otherwise acquire, or agree or commit to repurchase,
redeem or otherwise acquire, any shares of stock or other equity or debt
securities or equity interests of the Company or any of its subsidiaries; (g)
not amend or otherwise modify the terms of any Company Stock Options or the
Company Option Plans, the effect of which would be to make such terms more
favorable to the holders thereof or persons eligible for participation therein;
(h) other than regularly scheduled seniority increases in the ordinary course of
business consistent with past practice, not increase the compensation payable or
to become payable to any directors, officers or employees of the Company or any
of its subsidiaries, or grant any severance or termination pay to, or enter into
any employment or severance agreement with any director or officer of the
Company or any of its subsidiaries, or establish, adopt, enter into or amend in
any material respect or take action to accelerate any material rights or
benefits under any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer or
employee or the Company of any of its subsidiaries; (i) not acquire or agree to
acquire (including, without limitation, by merger, consolidation, or acquisition
of stock, equity securities or interests, or assets) any corporation,
partnership, joint venture, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets of any
other person outside the ordinary course of business consistent with past
practice or any interest in any real properties (whether or not in the ordinary
course of business); (j) not incur, assume or guarantee any indebtedness for
borrowed money (including draw-downs on letters or lines of credit) or issue or
sell any notes, bonds, debentures, debt instruments, evidences of indebtedness
or other debt securities of the Company or any of its subsidiaries or any
options, warrants or rights to purchase or acquire any of the same, except for
(i) renewals of existing bonds and letters of credit in the ordinary course of
business not to exceed $1,000,000 in the aggregate and (ii) advances, loans or
other indebtedness in the ordinary course of business consistent with past
practice in an aggregate amount not to exceed $1,000,000; (k) not sell, lease,
license, encumber or otherwise dispose of, or agree to sell, lease, license,
encumber or otherwise dispose of, any material properties or assets of the
Company and its subsidiaries taken as a whole; (l) not authorize or make any
capital expenditures (including by lease) in excess of $1,000,000 in the
aggregate for the Company and all of its subsidiaries; (m) not make any material
change in any of its accounting or financial reporting (including tax accounting
and reporting) methods, principles or practices, except as may be required by
U.S. GAAP or applicable tax laws; (n) not make any material tax election or
settle or compromise any material United States or foreign tax liability; (o)
except in the ordinary course of business consistent with past practice, not
amend, modify or terminate certain specified contracts or waive, release or
assign any material rights or claims thereunder; (p) not adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
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restructuring, recapitalization or other reorganization of the Company or any of
its subsidiaries; and (q) except as to subsections (a), (b) and (c) above, not
agree or commit in writing or otherwise to do any of the foregoing.
Stockholders Meeting. The Company has agreed that, if required for the
Merger under the DGCL, it shall, through its Board of Directors, duly call a
meeting of its stockholders for the purpose of considering and approving the
Merger Agreement, the Merger and all other transactions contemplated therein.
Under the DGCL, if, after consummation of the Offer, Purchaser owns at least 90%
of the Shares then outstanding, Purchaser will be able to cause the Merger to
occur without a vote of the Company's stockholders. If, however, after
consummation of the Offer, Purchaser owns less than 90% of the then outstanding
Shares, a vote of the Company's stockholders will be required under the DGCL to
approve the Merger. Assuming no additional Shares (or warrants, options or
rights exercisable for, or securities convertible into, Shares) have been issued
(other than Shares issued pursuant to such options and rights referred to
above), if Purchaser were to acquire 3,842,707 pursuant to the Offer (including
the Shares that, pursuant to the Stockholders' Agreement are required to be
tendered in response to the Offer), the Minimum Condition would be satisfied and
the Purchaser and Parent would together own a majority of the Shares outstanding
on a diluted basis and would have the votes required to effect the Merger
without the vote of any other stockholders following the Tender Offer Purchase
Time, the Company will mail to its stockholders an information proxy conforming
to the requirements of Schedule 14A under the Exchange Act, regarding a special
meeting of the Company's stockholders to be held to consider approval of the
Merger. As a result of certain timing requirements under federal and Delaware
law, the special meeting of the stockholders would not take place until a number
of weeks following the Tender Offer Purchase Time.
Other Potential Acquirers. Pursuant to the Merger Agreement, the Company
has agreed that from and after the date of the Merger Agreement until the
earlier of the Effective Time or termination of the Merger Agreement in
accordance with its terms, the Company and its subsidiaries shall not, and will
instruct their respective directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly,
solicit or encourage submission of, any inquiries, proposals or offers by any
person, entity or group (other than IBA and its affiliates, agents and
representatives), or participate in any discussions or negotiations with, or
disclose any non-public information concerning the Company to, any person,
entity or group (other than IBA and its affiliates, agents and representatives),
in connection with any "Acquisition Proposal" with respect to the Company. For
purposes of the Merger Agreement, an "Acquisition Proposal" with respect to an
entity means any proposal or offer relating to (i) any merger, consolidation,
sale of substantial assets or similar transactions involving the entity or any
subsidiaries of the entity (other than sales of assets or inventory in the
ordinary course of business or as permitted under the terms of the Merger
Agreement); (ii) the acquisition by any person of beneficial ownership or a
right to acquire beneficial ownership of, or the formation of any "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital stock of the
entity (except for acquisititions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Scheduled 13G
with respect thereto); (iii) the adoption by the entity of a plan of liquidation
or the declaration or payment of an extraordinary dividend; (iv) the repurchase
by the entity of more than 20% of its outstanding shares of voting stock; (v)
the acquisition by the entity of direct or indirect ownership of a business
whose annual revenue, net income or assets is greater than 20% of the entity; or
(vi) 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. The Company has
agreed to notify IBA as promptly as practicable if any inquiry or proposal is
made or any information or access is requested in connection with an Acquisition
Proposal or potential Acquisition Proposal and as promptly as practicable notify
IBA of the terms and conditions of any such Acquisition Proposal. In addition,
subject to certain other provisions of the Merger Agreement, from and after the
date of the Merger Agreement until the earlier of the Effective Time and
termination of the Merger Agreement its terms, the Company and its subsidiaries
will not, and will instruct their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to directly or
indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any person, entity
or group (other than Parent or Purchaser); provided, however, that nothing in
the Merger Agreement shall prohibit the
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Company's Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act. Except as allowed under this
paragraph, the Company's Board of Directors will not withdraw or modify in a
manner adverse to Parent or Purchaser its recommendation of the transactions
contemplated hereby or approve or recommend any Acquisition Proposal.
Notwithstanding the provisions above, prior to consummation of the Offer, the
Company may, to the extent the Board of Directors of the Company determines, in
good faith, after consultation with outside legal counsel, that the Board of
Directors' fiduciary duties under applicable law require it to do so,
participate in discussions or negotiations with, and furnish information to, any
person, entity or group after such person, entity or group has delivered to the
Company in writing, an unsolicited bona fide Acquisition Proposal which the
Board of Directors of the Company in its good faith reasonable judgment
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable than the Offer and the Merger to the
stockholders of the Company from a financial point of view and for which
financing, to the extent required, is then committed or which, in the good faith
reasonable judgment of the Board of Directors of the Company (based upon the
advice of independent financial advisors) is reasonably capable of being
financed by such person, entity or group and which is likely to be consummated
(a "Superior Proposal"). Notwithstanding anything to the contrary in the Merger
Agreement, the Company will not provide any non-public information to a third
party unless: (x) the Company provides such non-public information pursuant to a
non-disclosure agreement with terms regarding the protection of confidential
information at least as restrictive as such terms in the confidentiality
agreement with Purchaser and Parent; and (y) such non-public information has
been previously delivered to Parent.
In the event the Company receives a Superior Proposal, nothing contained in
the Merger Agreement prevents the Board of Directors of the Company from
recommending such Superior Proposal to the Company's stockholders, if the Board
of Directors determines, in good faith, after consultation with outside legal
counsel, that such action is required by its fiduciary duties under applicable
law, provided, however, that the Company shall not recommend to its stockholders
a Superior Proposal for a period of not less than 72 hours after Parent's
receipt of a copy of such Superior Proposal (or a description of terms and
conditions thereof, if not in writing).
The Company shall pay to Parent an amount equal to $7,500,000 (the
"Break-Up Fee") if any of the following shall occur: (i) the Board of Directors
of the Company or any committee thereof shall have approved, or recommended that
stockholders of the Company accept or approve, an Acquisition Proposal by a
third party; (ii) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation that the
stockholders of the Company accept or approve (as the case may be), the Offer,
the Merger Agreement and the Merger; or (iii) the Company shall have failed to
include in its Schedule 14D-9 the recommendation of the Board of Directors of
the Company that the stockholders of the Company accept the Offer. Such Break-Up
Fee shall be payable within thirty (30) days of such event.
Dissenting Shares. In the event that dissenters' rights are available in
connection with the Merger pursuant to Section 262 of the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and that are held
by stockholders who did not vote in favor of the Merger and who comply with all
of the relevant provisions of Section 262 of the DGCL (the "Dissenting Shares")
shall not be converted into or be exchangeable for the right to receive the Cash
Merger Consideration, but instead shall be converted into the right to receive
such consideration as may be determined to be due to such stockholders pursuant
to Section 262 of the DGCL, unless such holders shall have failed to perfect or
shall have effectively withdrawn or lost their rights to appraisal under the
DGCL. If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right, such holder's Shares shall thereupon be deemed to
have been converted into and to have become exchangeable for the right to
receive, as of the Effective Time, the Cash Merger Consideration without any
interest thereon. The Company has agreed to give Parent prompt notice of any
written demands for appraisal of Shares received by the Company and the
opportunity to participate in all negotiations and proceedings with respect to
any such demands.
THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED
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BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SECTION 262 OF THE
DGCL, INCLUDED HEREWITH IN ANNEX A. THE PRESERVATION AND EXERCISE OF APPRAISAL
RIGHTS ARE CONDITIONED ON STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
DGCL.
Conditions to the Merger. The respective obligations of the Company, IBA
and Purchaser to effect the Merger are subject to the satisfaction at or prior
to the Closing Time of the following conditions: (a) the Merger Agreement, the
Merger and the other transactions contemplated thereby shall have been approved
by all necessary corporate action of the Company, including, if necessary,
adoption by vote of the stockholders of the Company; (b) no governmental entity
or court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order, decree,
injunction or other order (and if temporary or preliminary, not vacated within
five business days of its entry) which is in effect and which (1) makes the
payment of the Cash Merger Consideration illegal or otherwise prohibits or
restricts consummation of the Merger or any of the other applicable transactions
contemplated thereby, or (2) imposes material limitations on the ability of
Parent, IBA GP or Purchaser to acquire or hold or to exercise any rights of
ownership of the Surviving Corporation, or effectively manage or control the
Surviving Corporation and its business, assets and properties; (c) any waiting
period applicable to the Merger under the HSR Act shall have terminated or
expired and any other governmental or regulatory notices or approvals required
with respect to the transactions contemplated hereby shall have been either
filed or received; and (d) Purchaser shall have purchased Shares pursuant to the
Offer.
Termination. The Merger Agreement may be terminated, at any time prior to
the Effective Time, whether before or after approval by the stockholders of the
Company: (a) by mutual written agreement of the Boards of Directors of IBA and
the Company; (b) by either IBA or the Company: (i) if the Offer shall be
terminated or expire without any Shares having been purchased pursuant to the
Offer; provided, however, that a party shall not be entitled to terminate the
Merger Agreement pursuant to this provision if it is in material breach of its
representations and warranties, covenants or other obligations under the Merger
Agreement; and provided, further, however, that if the Offer is not consummated
due to a failure to obtain clearance under the HSR Act, Parent may not terminate
the Merger Agreement until December 31, 1999 and the Company may not terminate
the Merger Agreement until April 1, 2000; (ii) if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such order,
decree, ruling or other action shall have become final and non-appealable; (c)
by Parent: (i) if the Board of Directors of the Company or any committee thereof
shall have approved, or recommended that stockholders of the Company accept or
approve, an Acquisition Proposal by a third party, or shall have resolved to do
any of the foregoing; (ii) if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified its approval of, or
recommendation that the stockholders of the Company accept or approve (as the
case may be), the Offer, the Merger Agreement and the Merger, or shall have
resolved to do any of the foregoing; (iii) if the Company shall have failed to
include in the Schedule 14D-9 the recommendation of the Board of Directors that
the stockholders of the Company accept the Offer; (iv) prior to the purchase of
the Shares pursuant to the Offer, if the Company is in material breach of any of
its covenants or obligations under the Merger Agreement, or any representation
or warranty of the Company contained in the Merger Agreement shall have been
incorrect, in any material respect, when made; (v) prior to the purchase of
Shares pursuant to the Offer, in the event that the conditions to the Offer
shall not be satisfied, provided that Parent may not terminate the Merger
Agreement due to a failure to obtain clearance under the HSR Act until December
31, 1999; or (vi) after purchase of the Shares pursuant to the Offer, if the
Company is in violation or breach of Section 1.3 of the Merger Agreement; (d) by
the Company: (i) if the Offer shall not have been commenced in accordance with
the Merger Agreement, or Parent or Purchaser shall have failed to purchase
validly tendered Shares in violation of the terms of the Offer within ten (10)
business days after the expiration of the Offer; provided, however, that the
Company shall not terminate the Merger Agreement if it is in material breach of
its representations and warranties, covenants, or other obligations under the
Merger Agreement; (ii) if the Board of Directors of the Company has resolved to,
and in fact does, recommend to the Company's stockholders that they accept a
Superior Proposal, provided all provisions of the Merger
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<PAGE> 27
Agreement have been complied with and the Break-Up Fees have been paid to
Parent; (iii) prior to the purchase of Shares pursuant to the Offer, if Parent
or Purchaser is in material breach of any of its covenants or obligations under
the Merger Agreement, or any representation or warranty of Parent or Purchaser
contained in the Merger Agreement in any material respect, when made; or (iv) at
any time after March 31, 2000 if the Offer has not been consummated due to a
failure to obtain clearance under the HSR Act; provided, however, that the
Company shall not be entitled to terminate the Merger Agreement if it is in
material breach of its representations and warranties, covenants and other
obligations under the Merger Agreement.
Amendment Of The Merger Agreement. The Merger Agreement may be amended by
the Company, Purchaser, IBA and IBA GP by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that (i) any such amendment shall be in writing signed by all
of the parties, (ii) any such waiver, amendment or supplement by the Company
shall be effective as against the Company only if approved by a majority of
those directors of the Company then in office who were directors of the Company
as of June 10, 1999, or are directors (other than directors designated by
Purchaser in accordance with the Merger Agreement) designated by such persons to
fill any vacancy, and (iii) after adoption of the Merger Agreement and the
Merger by the stockholders of the Company, no amendment that reduces the Merger
Consideration or changes the form thereof or changes any other terms and
conditions of the Merger Agreement can be made without the further approval of
the stockholders of the Company if the changes, alone or in the aggregate, would
materially adversely affect the stockholders of the Company.
The Stockholders' Agreement
On June 10, 1999, the Stockholders' Agreement was executed by and among
Parent, IBA GP, Purchaser and the Selling Stockholders. The following summary of
the material terms of the Stockholders' Agreement is qualified in its entirety
by reference to the copy of the Stockholders' Agreement filed as an Exhibit to
the Schedule 14D-1.
Voting of Shares. Each Selling Stockholder agrees that during the period
commencing as of the date of the Stockholders' Agreement, and continuing until
the Closing Time or 45 days after the termination of the Merger Agreement in
accordance with its terms, whichever first occurs, each Selling Stockholder
shall vote (or cause to be voted) the Shares held of record or beneficially
owned by each Selling Stockholder at any meeting of the holders of the Shares,
whether owned on June 10, 1999, or thereafter, (i) in favor of approval of the
Merger Agreement, all transactions contemplated thereby and any actions required
in furtherance of the Merger Agreement or the Stockholders' Agreement (including
election of such directors of the Company as Parent is entitled to designate
pursuant to the Merger Agreement); (ii) against any action or agreement that is
intended, or could reasonably be expected, to impede, interfere with, or prevent
the Offer or the Merger or result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
or any of its subsidiaries under the Merger Agreement or the Stockholders'
Agreement; and (iii) except as specifically requested in writing in advance by
IBA, against the following actions (other than the Merger and the transactions
contemplated by the Merger Agreement and the Stockholders' Agreement): (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries or
affiliates; (B) a sale, lease, transfer or disposition by the Company or any of
its subsidiaries of any assets outside the ordinary course of business or any
assets which in the aggregate are material to the Company and its subsidiaries
taken as a whole, or a reorganization, recapitalization, dissolution or
liquidation of the Company or any of its subsidiaries or affiliates; (C) (i) any
change in the present capitalization of the Company or any amendment of the
Company's charter or Bylaws; (ii) any other material change in the Company's or
any of its subsidiaries' corporate structure or business; or (iii) any other
action that, in the case of each of the matters referred to in clauses (C) (i),
(ii) or (iii), is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone or materially adversely affect the Offer, the
Merger or the transactions contemplated by the Stockholders' Agreement or the
Merger Agreement. None of the Selling Stockholders shall enter into any
agreement or understanding with any person the effect of which would be
inconsistent with or violative of the provisions and agreements contained in the
Stockholders' Agreement.
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Irrevocable Proxy. Effective from June 10, 1999, each Selling Stockholder
has agreed to appoint certain officers of Parent, and their respective
successors and designees, as true, lawful and irrevocable (until the Closing
Time or 45 days after the termination of the Merger Agreement, whichever is
earlier) proxies and attorneys-in-fact (with full power of substitution) to vote
their Shares, or to grant a consent or approval in respect of such Shares. Each
Selling Stockholder granted to Parent and its respective successors and
designees an irrevocable proxy coupled with an interest.
Other Covenants, Representations and Warranties. The Stockholders'
Agreement contains certain customary representations and warranties of the
parties thereto, including, without limitation, representations and warranties
by the Selling Stockholders as to ownership of their Shares, power and
authority.
Tender of Shares, Restrictions on Transfer, Proxies and
Non-Interference. Each Selling Stockholder shall tender his or its Shares in the
Offer and shall not withdraw any Shares therefrom unless and until the Merger
Agreement is terminated in accordance with its terms without such Shares being
purchased by Purchaser pursuant to the Offer. Each of the Selling Stockholders
has agreed not, directly or indirectly, to: (i) tender his or its Shares in any
other tender offer or exchange offer for the Shares; (ii) except as contemplated
by the Stockholders' Agreement or the Merger Agreement, otherwise offer for
sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of,
or enter into any contract, option or other arrangement or understanding with
respect to any interest therein; (iii) grant any proxies or powers of attorney,
deposit any Shares into a voting trust or enter into a voting agreement with
respect to any Shares; or (iv) take any action that would make any
representation or warranty of any such Selling Stockholder contained herein
untrue or incorrect or have the effect of preventing or disabling such Selling
Stockholder from performing such Selling Stockholder's obligations under the
Stockholders' Agreement.
Other Potential Acquirers. Pursuant to the Stockholders' Agreement, each
Selling Stockholder shall (i) cease existing discussions or negotiations, if
any, with any parties conducted on or before June 10, 1999, with respect to any
acquisition of all or any material portion of the assets of, or any equity
interest in, the Company or any of its subsidiaries or any business combination
with the Company or any of its subsidiaries, in his or her capacity as a
stockholder of the Company; and (ii) from and after June 10, 1999, until the
termination of the Merger Agreement, not, in such capacity, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or take any other action to
facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any such transaction or
acquisition, or agree to endorse any such transaction or acquisition, or
authorize or permit any of the Selling Stockholders' agents to do so, and each
Selling Stockholder shall promptly notify Parent of any proposal and shall
provide a copy of such written proposal and a summary of any oral proposal to
Parent immediately after receipt thereof (and shall specify the material terms
and conditions of such proposal and identify the person making such proposal)
and thereafter keep Parent advised of any development with respect thereto.
Option. Pursuant to the Stockholders' Agreement, each Selling Stockholder
has granted to Parent an irrevocable option (the "Option") to purchase all
Shares held of record or beneficially owned by such Selling Stockholder at the
Offer Price or such higher price as may be offered by Purchaser in the Offer
(the "Option Price"), and Parent may exercise the Option, in whole or in part,
at any time and from time to time, following the occurrence of a Purchase Event
(as defined below); provided that any part thereof not exercised shall expire
upon the earliest to occur of (i) the Closing Time, (ii) 45 days after a
Purchase Event; or (iii) 45 days after the termination of the Merger Agreement;
provided that the expiration date shall not extend beyond March 31, 2000.
"Purchase Event" means any of the following events: (i) when any person or group
other than IBA, Purchaser or an affiliate thereof acquires the beneficial
ownership of more than 20% of the outstanding capital stock of the Company, or
right to acquire such capital stock of the Company; (ii) when the Company has
entered into agreement or approved or recommended any proposal which provides
for the acquisition of 20% or more of the outstanding capital stock of the
Company or substantially all of the assets of the Company by any person or group
other than IBA, Purchaser or an affiliate thereof; (iii) (A) the failure of the
Company's stockholders to approve the Merger Agreement or the transactions
contemplated thereby at a meeting called to consider such Merger Agreement, if
such meeting shall have been preceded by (x) the public announcement by any
Person or group (other than Parent, Acquisition or an affiliate of any of them)
of
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an offer or proposal to acquire, merge or consolidate with the Company, or (y)
the Board of Directors of the Company's publicly withdrawing or modifying, or
publicly announcing its intent to withdraw or modify, its recommendation that
the stockholders of the Company approve the transactions contemplated by the
Merger Agreement or (B) the acceptance by the Company's Board of Directors of,
or the public recommendation by the Company's Board of Directors that the
stockholders of the Company accept, an offer or proposal from any Person or
group (other than Parent, Acquisition or an affiliate of any of them), to
acquire 20% or more of the outstanding capital stock of the Company or for a
merger or consolidation or any similar transaction involving the Company; (iv)
the making of an Acquisition Proposal as described in Section 5.3 of the Merger
Agreement entitling IBA or the Company to terminate the Merger Agreement
pursuant to Section 9.1 of the Merger Agreement; or (v) any breach by the
Selling Stockholders of the Stockholders' Agreement.
Termination. Except as otherwise provided therein, the Stockholders'
Agreement shall terminate upon the earlier of (A) termination of the Merger
Agreement in accordance with its terms, or (B) the Effective Time.
13. DIVIDENDS AND DISTRIBUTIONS
If on or after the date of the Merger Agreement the Company should declare
with respect to the Shares, any stock splits or stock dividends or engage in any
combinations, recapitalization or the like, then, without prejudice to
Purchaser's rights under Section 15 of this Offer to Purchase, the purchase
price per Share payable by Purchaser shall be adjusted accordingly.
14. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; NASDAQ NATIONAL MARKET AND
EXCHANGE ACT REGISTRATION
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and the number of holders
of Shares and could thereby adversely affect the liquidity and market value of
the remaining publicly held Shares.
Nasdaq National Market Inclusion
According to the Nasdaq National Market's current published guidelines, the
Shares would not be eligible to be included for continued listing if, among
other things, the number of publicly held Shares falls below 750,000, the number
of holders of Shares falls below 400, the aggregate market value of such
publicly held Shares falls below $5,000,000, or the net tangible assets of the
Company fall below $4,000,000. If these standards are not met, the Shares would
no longer be admitted to quotation on the Nasdaq National Market. Depending on
the number of Shares acquired pursuant to the Offer, price quotations for the
Shares may no longer meet the requirements for any continued trading
over-the-counter, including the Nasdaq "additional list" or a "local list." If,
as a result of the purchase of Shares pursuant to the Offer or otherwise,
trading of the Shares over-the-counter is discontinued, the liquidity of and
market for the Shares could be adversely affected. Any reduction in the number
of Shares that might otherwise trade publicly may have an adverse effect on the
market price for or marketability of the Shares and may cause future prices to
be less than the Offer Price.
Margin Regulations
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System, which has the effect, among
other things, of allowing brokers to extend credit on the collateral of such
Shares for the purpose of buying, carrying or trading in securities ("Purpose
Loans"). Depending upon factors similar to those described above regarding the
continued listing, public trading and market quotations of the Shares, it is
possible that, following the purchase of the Shares pursuant to the Offer, the
Shares would no longer constitute "margin securities" for the purposes of the
margin regulations of the Federal Reserve Board and therefore could no longer be
used as collateral for Purpose Loans made by brokers.
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15. CERTAIN CONDITIONS OF THE OFFER
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition. Furthermore, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the Commission, including
Rule 14e-l(c) under the Exchange Act relating to Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer, pay for, and may delay the acceptance for payment of, or subject to the
restrictions referred to above, the payment for, any tendered Shares, and may
amend the Offer consistent with the terms of the Merger Agreement, including
extending the deadline for tendering Shares, or terminate the Offer, if any of
the following events shall occur:
(A) from the date of the Merger Agreement until the Tender Offer
Purchase Time, there shall have occurred any change, event, occurrence or
circumstance which, individually or in the aggregate, has a Material Change
(as such term is defined in the Merger Agreement) on the Company;
(B) from the date of the Merger Agreement until the Tender Offer
Purchase Time, any governmental entity or court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, executive order, decree, injunction or other order (and
if temporary or preliminary, not vacated within five (5) business days of
its entry), except with regard to HSR Act approval which is in effect at
the Tender Offer Purchase Time and which (1) makes the acceptance for
payment of, or the payment for, some or all of the Shares illegal or
otherwise prohibits or restricts consummation of the Offer, the Merger or
any of the other transactions contemplated thereby, (2) imposes material
limitations on the ability of Parent, IBA GP or Purchaser to acquire or
hold or to exercise any rights of ownership of the Shares, or effectively
to manage or control the Company and its business, assets and properties or
(3) would result in a Material Change to the Company; provided, however,
that the parties shall use reasonable efforts to cause any such decree,
judgment or other order to be vacated or lifted as soon as practicable;
(C) the representations and warranties of the Company set forth in the
Merger Agreement shall not (i) have been true and correct in one or more
material respects on the date hereof or (ii) except for certain
representation and warranties designated in Section 7.1 of the Merger
Agreement, be true and correct in one or more material respects as of the
scheduled Expiration Date (as such date may be extended) of the Offer as
though made on or as of such date or the Company shall have breached or
failed in any respect to perform or comply with any material obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it except, in each case with respect to clause (ii), (1)
for changes specifically permitted by the Merger Agreement and (2) (x) for
those representations and warranties that address matters only as of a
particular date which are true and correct as of such date or (y) where the
failure of representations and warranties (without regard to materiality
qualifications therein contained) to be true and correct, or the
performance or compliance with such obligations, agreements or covenants,
would not, individually or in the aggregate result in a Material Change to
the Company;
(D) from the date of the Merger Agreement until the Tender Offer
Purchase Time, the Merger Agreement shall have been terminated in
accordance with its terms;
(E) from the date of the Merger Agreement until the Tender Offer
Purchase Time, the Board of Directors of the Company or any committee
thereof shall have (1) withdrawn or modified (including without limitation,
by amendment of the Company's Schedule 14D-9) in a manner adverse to Parent
or Purchaser its approval or recommendation of the Offer, the Merger or the
Agreement, (2) approved or recommended any Acquisition Proposal by a third
party other than the Offer and the Merger, (3) resolved to do any of the
foregoing, or (4) upon a request to reaffirm the Company's approval or
recommendation of the Offer, the Merger Agreement or the Merger, the Board
of Directors of the Company shall fail to do so within two business days
after such request is made;
(F) from the date of the Merger Agreement until the Tender Offer
Purchase Time, any of the consents, approvals, authorizations, orders or
permits required to be obtained by the Company, Parent, IBA GP or
Purchaser, or their respective subsidiaries in connection with the Offer or
the Merger from, or
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filings or registrations required to be made by any of the same prior to
the Tender Offer Purchase Time with, any governmental entity in connection
with the execution, delivery and performance of the Merger Agreement
(including without limitation the termination or expiration of any
applicable waiting period or the receipt of any required clearance under
the HSR Act) shall not have been obtained or made or shall have been
obtained or made subject to conditions or requirements, which (A) make the
acceptance for payment of, or the payment for the Shares illegal or
otherwise prohibits or restricts the consummation of the Offer or the
Merger or (B) have a Parent Material Adverse Effect (as defined in the
Merger Agreement) or result in a Material Change to the Company or (C)
impose material limitations on the ability of Parent, IBA GP or Purchaser
effectively to manage or control the Company; or
(G) from the date of the Merger Agreement until the Tender Offer
Purchase Time, in the case of HSR Act approval, any governmental entity or
court of competent jurisdiction shall have entered a final non-appealable
order enjoining consummation of the Merger.
(H) from the date of the Merger Agreement until the Tender Offer
Purchase Time, there shall have occurred (1) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or in Belgium or (2) the commencement of a war or armed hostilities
involving the United States or Belgium and resulting in a Material Change
to the Company or materially adversely affecting (or materially delaying)
the consummation of the Offer
The foregoing conditions (the "Offer Conditions") are for the sole benefit
of Purchaser and may be waived by Purchaser, in whole or in part at any time and
from time to time in the sole discretion of Purchaser. The failure by Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
General
Except as described below, Parent is not aware of any license or regulatory
permit that appears to be material to the business of the Company and its
subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares pursuant to the Offer, or of any approval or other action
by any governmental, administrative or regulatory agency or authority or public
body, domestic or foreign, that would be required for the acquisition or
ownership of Shares pursuant to the Offer. Should any such approval or other
action be required, it is presently contemplated that such approval or action
would be sought except as described below in this Section under "State Takeover
Statutes." While, except as otherwise expressly described herein, Parent does
not currently intend to delay acceptance for payment of Shares tendered pursuant
to the Offer pending the outcome of any such matter, 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
Company's business or that certain parts of the Company's business might not
have to be disposed of in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action, any of which could cause Parent to decline to accept for payment
or pay for any Shares tendered. Parent's obligation under the Offer to accept
for payment and pay for shares is subject to the certain conditions, including
conditions relating to legal matters discussed in this Section 16.
Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission ("FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to such requirements.
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IBA expects to file a Notification and Report Form with respect to the
Offer under the HSR Act as soon as practicable following commencement of the
Offer. The waiting period under the HSR Act with respect to the Offer will
expire at 11:59 p.m. New York City time, on the 15th day after the date such
form is filed, unless early termination of the waiting period is granted. In
addition, the Antitrust Division or the FTC may extend such waiting periods by
requesting additional information or documentary material from IBA. If such a
request is made with respect to the Offer, the waiting period related to the
Offer will expire at 11:59 p.m. New York City time on the 10th day after
substantial compliance by Parent with such request. With respect to each
acquisition, the Antitrust Division or the FTC may issue only one request for
additional information. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties may engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction while such negotiations continue.
Expiration or termination of applicable waiting periods under the HSR Act is a
condition to the obligation to accept for payment and pay for Shares tendered
pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed purchase of the Shares
pursuant to the Offer. At any time before or after such purchase, the Antitrust
Division or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
transaction or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Parent or the Company. Litigation seeking similar relief
could be brought by private parties.
Parent does not believe that consummation of the Offer and the other
transactions contemplated by the Merger Agreement will result in violation of
any applicable antitrust laws. However, there can be no assurance that a
challenge to the Offer and the other transactions contemplated by the Merger
Agreement on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. See "THE TENDER OFFER-15. Certain Conditions Of The
Offer" for certain conditions to the purchase of the Shares, including
conditions with respect to litigation and certain governmental actions.
Other Regulatory Consents
The Company's gamma radiation facilities are subject to regulation and
licensing by the Nuclear Regulatory Commission (the "NRC"). In connection with a
change in control of the Company, the approval of the NRC must be obtained.
Parent is not aware of any reason that the approval of the NRC will not be
obtained on a timely basis. The Company must also obtain the consents of certain
regulatory authorities in connection with the change in control of the Company.
State Takeover Statutes
The Company is incorporated under the laws of the State of Delaware. A
number of states throughout the United States have enacted takeover statutes
that purport, in varying degrees, to be applicable to attempts to acquire
securities of corporations that are incorporated or have assets, stockholders,
executive offices or places of business in such states. In Edgar v. MITE
Corporation, the Supreme Court of the United States invalidated on
constitutional grounds the Illinois Business Takeover Act, which, as a matter of
state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided that
such laws were applicable only under certain conditions, in particular, that the
corporation has a substantial number of stockholders in the state and is
incorporated there.
SECTION 203 OF THE DGCL
Section 203 of the DGCL, in general, prohibits a Delaware corporation such
as the Company from engaging in a "Business Combination" (defined as a variety
of transactions, including mergers, as set forth
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below) with an "Interested Stockholder" (defined generally as a person that is
the beneficial owner of 15% or more of a corporation's outstanding voting stock)
for a period of three years following the date that such person became an
Interested Stockholder unless, among other things, prior to the time such person
became an Interested Stockholder, the board of directors of the corporation
approved either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The Company's Board of Directors
has approved the Merger Agreement, the Stockholders' Agreement and Purchaser's
acquisition of Shares pursuant to the Offer and the Stockholders' Agreement.
Therefore, Section 203 of the DGCL is inapplicable to the Offer, the Merger and
the Stockholders' Agreement. Based on information supplied by the Company, the
Purchaser does not believe that any other state takeover statutes purport to
apply to the Offer or the Merger or the Stockholders' Agreement. Neither
Purchaser nor Parent has currently complied with any state takeover statute or
regulation. Purchaser reserves the right to challenge the applicability or
validity of any state law purportedly applicable to the Offer or the Merger and
nothing in this Offer to Purchase or any action taken in connection with the
Offer or the Merger is intended as a waiver of such right. If it is asserted
that any state takeover statute is applicable to the Offer or the Merger and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, Purchaser might be required to file certain
information with, or to receive approvals from, the relevant state authorities,
and the Purchaser might be unable to accept for payment or pay for Shares
tendered pursuant to the Offer, or be delayed in consummating the Offer or the
Merger. In such case, Purchaser may not be obligated to accept payment or pay
for any Shares tendered pursuant to the Offer. See "THE TENDER OFFER-2.
Procedure For Accepting The Offer And Tendering Shares."
Shareholders Rights Plan
The Company adopted a shareholder rights plan pursuant to a rights
agreement on March 31, 1999 between the Company and US Stock Transfer
Corporation (the "Rights Agreement"). The Company's Board of Directors has taken
all necessary action under the Rights Agreement so that (x) neither the
execution or delivery of the Merger Agreement, or the Stockholders' Agreement,
nor the consummation of the Offer will cause (i) the Rights to become
exercisable under the Rights Agreement, (ii) Parent, IBA GP or Purchaser to be
deemed an "Acquiring Person" (as defined in the Rights Agreement), or (iii) the
"Distribution Date" (as defined in the Rights Agreement) to occur upon any such
event and (y) the expiration of the Rights shall occur immediately prior to the
Effective Time.
17. FEES AND EXPENSES
Parent has retained MacKenzie Partners, Inc. to act as the Information
Agent and IBJ Whitehall Bank & Trust Company to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services and be
reimbursed for certain reasonable out-of-pocket expenses. Parent has also agreed
to indemnify the Information Agent and the Depositary against certain
liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
Parent has retained Bear, Stearns & Co. Inc. as Dealer Manager in
connection with the Offer. Parent has also agreed to pay the Dealer Manager
customary fees and reimburse the Dealer Manager for its out-of-pocket expenses,
including the reasonable fees and expenses of its counsel in connection with its
engagement and to indemnify the Dealer Manager against certain liabilities under
the federal securities laws. In the ordinary course of its business, the Dealer
Manager engages in securities trading, market and brokerage activities and may,
at any time, hold long or short positions and may trade or otherwise effect
transactions in securities of the Company. As of June 16, 1999, the Dealer
Manager had no position in the Shares held for its own account.
Parent will not pay any fees or commissions to any broker or dealer or any
other person for soliciting tenders of Shares pursuant to the Offer (other than
to the Information Agent and the Dealer Manager). Brokers, dealers, commercial
banks, trust companies and other nominees will, upon request, be reimbursed by
IBA for customary mailing and handling expenses incurred by them in forwarding
offering materials to their customers.
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18. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. To the extent Purchaser or Parent
becomes aware of any state law that would limit the class of offerees in the
Offer, Purchaser reserves the right to amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, blue sky or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer is
being made on behalf of Purchaser by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of Purchaser or Parent not contained herein or in the
Letter of Transmittal and, if given or made, such information or representation
must not be relied upon as having been authorized. Neither the delivery of this
Offer to Purchase nor any purchase pursuant to the Offer shall, under any
circumstances, create any implication that there has been no change in the
affairs of Purchaser, IBA or the Company since the date as of which information
is furnished or the date of this Offer to Purchase.
Purchaser and Parent have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3
under the Exchange Act, furnishing certain additional information with respect
to the Offer, and may file amendments thereto.
Purchaser and Parent anticipate that the Company will file with the
Commission a Solicitation/ Recommendation Statement on Schedule 14D-9, together
with exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the
recommendations of the Board of Directors with respect to the Offer and the
reasons for such recommendations and furnishing certain additional related
information. Such Schedules and any amendments thereto, including exhibits, may
be inspected and copies may be obtained from the Commission in the manner set
forth in Section 7 (except that they will not be available at the regional
offices of the Commission).
June 17, 1999
32
<PAGE> 35
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT,
BELGABEAM, IBA GP AND PURCHASER
IBA
The following table sets forth the name, business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name of any corporation or other organization in which such
employment is conducted or was conducted, of each executive officer or director
of IBA. Except as otherwise indicated, all of the persons listed below are
citizens of the Kingdom of Belgium. Each occupation set forth opposite a
person's name, unless otherwise indicated, refers to employment with IBA. Unless
otherwise indicated, the principal business address of each director or
executive officer is Ion Beam Applications s.a., Chemin du Cyclotron, 3, B-1348
Louvain-la-Neuve, Belgium.
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND PRESENT OCCUPATION OR
CURRENT BUSINESS ADDRESS EMPLOYMENT MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------ --------------------- --------------------------------------------------
<S> <C> <C>
Yves Jongen President; Director President since March 28, 1986. Head of Cyclotron
Laboratory at the University of Louvain, Belgium
from July 1, 1970 to March 28, 1986.
Pierre Mottet Chief Executive Officer CEO since January 1, 1995. Executive
Vice-President from January 1, 1990 to December
31, 1994; Vice-President Marketing and Sales from
April 15, 1987 to December 31, 1989.
Eric de Lamotte Chief Financial Officer CFO since February 1, 1991.
Jean-Louis Bol Technical Director Technical Director since 1992.
Ahmet Cokragan Vice President of Vice President of Marketing and Sales since 1989.
Marketing and Sales
Philippe de Woot de Trixhe Director President of the Board since 1987. Professor at
the University of Louvain-la-Neuve, Belgium. Board
Member of Generale de Banque, Brussels, Belgium;
Glaceries de Saint Roch, Brussels, Belgium;
Alcatel-Etca, Charleroi, Belgium; Bull Belgique.
Ferdinand d'Oultremont Director Representative is a Director since 1994. Chairman
and Manager of Sopartec S.A., a Belgian venture
capital company, from 1991 to 1999.
Tenet Healthcare Corporation, Director United States citizen. Vice-President,
represented by Donald W. Acquisitions and Development at Tenet Healthsystem
Thayer and Executive Vice-President at Proton Therapy
Corp. of America from July 1978 to the present.
Belgabeam, represented by Director Representative is CEO of IBA
Pierre Mottet
Institut des Radioelements, Director Financial Manager at Institut des Radioelements,
represented by Nicole Fleurus, Belgium, since January 1991.
Destexhe
Banque Bruxelles Lambert Director Managing Director of Brussels office and Private
represented by Jacques de Banking at Banque Bruxelles Lambert.
Vaucleroy
Nivelinvest, represented by Director Executive President and CEO at Nivelinvest S.A., a
Jean-Pierre Dubois venture capital company, since December 1994.
</TABLE>
33
<PAGE> 36
Belgabeam
The following table sets forth the name, business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name of any corporation or other organization in which such
employment is conducted or was conducted of each executive officer or director
of Belgabeam. Except as otherwise indicated, all of the persons listed below are
citizens of the Kingdom of Belgium. Each occupation set forth opposite a
person's name, unless otherwise indicated, refers to employment with Belgabeam.
Unless otherwise indicated, the principal business address of each director or
executive officer is Ion Beam Applications s.a., Chemin du Cyclotron, 3, B-1348
Louvain-la-Neuve, Belgium.
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND PRESENT OCCUPATION
CURRENT BUSINESS ADDRESS OR EMPLOYMENT MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------ ------------------ --------------------------------------------------
<S> <C> <C>
Yves Jongen Chairman of the Board President of IBA since March 28, 1986. Head of
Cyclotron Laboratory at the University of Louvain,
Belgium from July 1, 1970 to March 28, 1986.
Pierre Mottet Director CEO of IBA since January 1, 1995. Executive Vice-
President of IBA from January 1, 1990 to December
31, 1994; Vice-President Marketing and Sales of
IBA from April 15, 1987 to December 31, 1989.
Eric de Lamotte Director CFO of IBA since February 1, 1991.
Jean-Louis Bol Director Technical Director of IBA since 1992.
Ahmet Cokragan Director Vice President of Marketing and Sales of IBA since
1989.
</TABLE>
IBA GP
There are two partners of IBA GP: IBA and IBA Participations SPRL, a
Belgian limited liability company ("Participations"). Information concerning the
executive officers and directors of IBA is set forth above. Pierre Mottet and
Eric de Lamotte are Director and Administrator, respectively, of Participations.
Additional information for Messieurs Mottet and de Lamotte is set forth above.
Purchaser
The following table sets forth the name, business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name of any corporation or other organization in which such
employment is conducted or was conducted of each executive officer or director
of Purchaser. Except as otherwise indicated, all of the persons listed below are
citizens of the Kingdom of Belgium. Each occupation set forth opposite a
person's name, unless otherwise indicated, refers to employment with Purchaser.
Unless otherwise indicated, the principal business address of each director or
executive officer is Ion Beam Applications s.a., Chemin du Cyclotron, 3, B-1348
Louvain-la-Neuve, Belgium.
<TABLE>
<CAPTION>
NAME, CITIZENSHIP AND PRESENT OCCUPATION
CURRENT BUSINESS ADDRESS OR EMPLOYMENT MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------ ------------------ --------------------------------------------------
<S> <C> <C>
Yves Jongen Secretary President of IBA since March 28, 1986. Head of
Cyclotron Laboratory at the University of Louvain,
Belgium from July 1, 1970 to March 28, 1986.
Pierre Mottet President CEO of IBA since January 1, 1995. Executive Vice-
President of IBA from January 1, 1990 to December
31, 1994; Vice-President Marketing and Sales of
IBA from April 15, 1987 to December 31, 1989.
Eric de Lamotte Treasurer CFO of IBA since February 1, 1991.
</TABLE>
34
<PAGE> 37
ANNEX A
TEXT OF SECTION 262 OF TITLE B, CHAPTER 1, SUB-CHAPTER IX OF THE DELAWARE
GENERAL CORPORATION LAW 262
APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a non-stock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251 (other than a merger effected pursuant to
sec.251(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or
sec.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
(a) Shares of stock of the corporation surviving or resulting from
such merger or consolidation or depository receipts in respect thereof;
(b) Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders;
(c) Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
(d) Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
35
<PAGE> 38
(3) In the event all the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares shall deliver to the Corporation, before the taking of the Note on
the merger or consolidation, a written demand for appraisal of such
stockholders shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and if, given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holders' shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
36
<PAGE> 39
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received by and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware, or such publication
as the Court deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof shall be borne
by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings, and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall taken in to account all relevant factors. In determining the fair
rate of interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceedings. Upon application by
the surviving or resulting corporation or by any stockholder entitled to
participate in the appraisal proceedings, the Court may, in its discretion,
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificates of stock to the Register in Chancery,
if such is required, may participate fully in all proceedings until it is
finally determined that such stockholder is not entitled to appraisal rights
under this section.
37
<PAGE> 40
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates represented by certificates upon the surrender to the corporation
of the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each stockholder of the Company or his broker, dealer, commercial
bank or trust company to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
IBJ Whitehall Bank and Trust Company
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
P.O. Box 84 One State Street Plaza One State Street Plaza
Bowling Green Station New York, NY 10004 New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Window Attn: Securities Processing Window
Attn: Reorganization Subcellar One (SC-1) Subcellar One (SC-1)
Operations Department
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission:
(For Eligible Institutions Only) Confirm by Telephone:
(212) 858-2611 (212) 858-2103
</TABLE>
38
<PAGE> 41
Any questions or requests for assistance or requests for additional copies
of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent or the Dealer
Manager at their respective locations and telephone number listed below.
Stockholders may also contact their brokers, dealers, commercial banks or trust
companies for assistance concerning the Offer.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, NY 10010
Toll Free: (800) 322-2885
The Dealer Manager for the Offer is:
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Call toll free (888) 293-1889
39
<PAGE> 1
(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK)
OF
STERIGENICS INTERNATIONAL, INC.
AT
$27.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 17, 1999
OF
IBA ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
ION BEAM APPLICATIONS S.A.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, JULY 15, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
IBJ WHITEHALL BANK AND TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
PO Box 84 One State Street One State
Bowling Green Station New York, NY 10004 Street New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Attn: Securities Processing
Attn: Reorganization Operations Window Subcellar One (SC-1) Window Subcellar One, (SC-1)
Department Confirm by Telephone:
By Facsimile Transmission: (212) 858-2103
(For Eligible Institutions Only)
(212) 858-2611
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL
IN THE APPROPRIATE SPACE PROVIDED THEREFOR, WITH SIGNATURE GUARANTEE IF
REQUIRED, AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. SEE INSTRUCTION
1.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if delivery is to be made by book-entry transfer to the
account maintained by the Depositary at The Depositary Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
2 of the Offer to Purchase. Stockholders whose certificates are not immediately
available or who cannot deliver their certificates or deliver confirmation of
the book-entry transfer of their Shares (as defined below) into the Depositary's
account at a Book-Entry Transfer Facility ("Book-Entry Confirmation") and all
other documents required hereby to the Depositary on or prior to the Expiration
Date (as defined in the Offer to Purchase) must tender their Shares according to
the guaranteed delivery procedures set forth in Section 2 of the Offer to
Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number
Transaction Code Number
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
Account Number:
Transaction Code Number:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) SHARE CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED**
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
TOTAL SHARES
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares being
delivered to the Depositary are being tendered. See Instruction 4.
- --------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to IBA Acquisition Corp., a Delaware
corporation (the "Purchaser"), which is an indirect wholly-owned subsidiary of
Ion Beam Applications s.a., a Belgian corporation, the above described shares of
Common Stock, par value $.001 per share (the "Common Stock", together with the
associated rights to purchase shares of Series A Junior Participating Preferred
Stock, par value $0.001 per share (the "Right" and together with the common
stock, the "Shares") of SteriGenics International, Inc., a Delaware corporation
(the "Company"), pursuant to Purchaser's offer to purchase all of the
outstanding Shares upon the terms and subject to the conditions set forth in the
Offer to Purchase dated June 17, 1999 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Offer"), at the purchase price of $27.00 per Share, net to the
tendering stockholder in cash.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms and subject to the conditions of
the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby (and any and all other Shares or other securities
issued or issuable in respect thereof on or after the date this Letter of
Transmittal is signed by the undersigned) and irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Shares (and any such other Shares or
securities) with full power of substitution (such power of attorney being deemed
to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such
<PAGE> 3
Shares (and any such other Shares or securities), or transfer ownership of such
Shares (and any such other Shares or securities) on the account books maintained
by a Book-Entry Transfer Facility, together in either such case with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser upon receipt by the Depositary, as the undersigned's agent, of the
purchase price (adjusted, if appropriate, as provided in the Offer to Purchase),
(b) present such Shares (and any such other Shares or securities) for transfer
on the books of the Company and (c) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares (and any such other Shares or
securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to vote in such manner as each such attorney and proxy or his
substitute shall in his sole discretion deem proper, and otherwise act
(including pursuant to written consent) with respect to all the Shares tendered
hereby which have been accepted for payment by Purchaser prior to the time of
such vote or action (and any and all other Shares or securities issued or
issuable in respect thereof on or after the date this Letter of Transmittal is
signed by the undersigned), which the undersigned is entitled to vote at any
meeting of stockholders (whether annual or special and whether or not an
adjourned meeting) of the Company, or consent in lieu of any such meeting, or
otherwise. This proxy is coupled with an interest in the Company and in the
Shares and is irrevocable and is granted in consideration of, and is effective
upon, the deposit by Purchaser with the Depositary of the purchase price for
such Shares in accordance with the terms of the Offer. Such acceptance for
payment shall revoke all prior proxies granted by the undersigned at any time
with respect to such Shares (and any such other Shares or other securities) and
no subsequent proxies will be given (and if given will be deemed not to be
effective) with respect thereto by the undersigned.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities issued or
issuable in respect thereof on or after the date this Letter of Transmittal is
signed by the undersigned) and that, when the same are accepted for payment by
Purchaser, Purchaser will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and the same will not
be subject to any adverse claim. The undersigned, upon request, will execute and
deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any and all such other Shares or other securities).
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators and legal
representatives of the undersigned. Except as stated in the Offer to Purchase,
this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price or any certificates for Shares not
tendered or accepted for payment in the name(s) of the undersigned. Similarly,
unless otherwise indicated under "Special Delivery Instructions," please mail
the check for the purchase price or return any certificates for Shares not
tendered or accepted for payment (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature. In the
event that both the Special Delivery Instructions and the Special Payment
Instructions are completed, please issue the check for the purchase price or any
certificates for Shares not tendered or accepted for payment in the name of, and
deliver such check or return such certificates to the person or persons so
indicated. Stockholders delivering Shares by book-entry transfer may request
that any Shares not accepted for payment be returned by crediting such account
maintained at a Book-Entry Transfer Facility as such stockholder may designate
by making an appropriate entry under "Special Payment Instructions." The
undersigned recognizes that Purchaser has no obligation pursuant to the Special
Payment Instructions to transfer any Shares from the name of the registered
holder thereof if Purchaser does not accept for payment any of the Shares so
tendered.
<PAGE> 4
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if certificates for To be completed ONLY if certificates for
Shares not tendered or not purchased and/or Shares not tendered or not purchased and/or
the check for the purchase price of Shares the check for the purchase price of Shares
purchased are to be issued in the name of purchased are to be sent to someone other than
someone other than the undersigned, or if the undersigned, or to the undersigned at an
Shares delivered by book-entry transfer which address other than that shown above.
are not purchased are to be returned by credit
to an account maintained at a Book-Entry
Transfer Facility other than that designated
above.
Issue check and/or certificate to: Issue check and/or certificate to:
Name Name
(Please Print) (Please Print)
Address Address
(Include Zip Code) (Include Zip Code)
(Tax Identification or Social Security Number) (Tax Identification or Social Security Number)
Credit unpurchased Shares delivered by
book-entry transfer to the Book-Entry Transfer
Facility account set forth below.
(Account Number)
</TABLE>
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 5
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
X __
X __
SIGNATURE(S) OF OWNER(S)
Dated: ____________________________ , 199____
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, agent, officer of a corporation or other person
acting in a fiduciary or representative capacity, please provide the following
information. See Instructions 1 and 5.)
Name(s)
__
(PLEASE PRINT)
Capacity (Full Title) __
(SEE INSTRUCTION 5)
Address __
__
__
(INCLUDE ZIP CODE)
Area Code and Telephone No. (______)
Employer Identification or Social Security Number
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
Name:
(PLEASE PRINT)
Title
Name of Firm
Address
__
__
(INCLUDE ZIP CODE)
Area Code and Telephone No. (______)
Dated: ____________________________ , 1999
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered
herewith, unless such holder has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
reverse hereof, or (ii) if such Shares are tendered for the account of a bank,
broker, dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each an "Eligible Institution"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders if certificates are to be
forwarded herewith or if tenders of Shares are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in Section 2 of the
Offer to Purchase. Certificates for all physically tendered Shares, or any
Book-Entry Confirmation of Shares, as the case may be, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), unless
an Agent's Message (as defined in the Offer to Purchase) is utilized, and any
other documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). Stockholders
whose certificates for Shares are not immediately available or who cannot
deliver their certificates and all other required documents to the Depositary on
or prior to the Expiration Date may tender their Shares by properly completing
and duly executing the Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedure set forth in Section 2 of the Offer to Purchase. Pursuant to
such procedure, (i) such tender must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, must be received by
the Depositary prior to the Expiration Date, and (iii) the certificates for all
physically tendered Shares or Book-Entry Confirmation of Shares, as the case may
be, together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), unless an Agent's Message is utilized, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq National Market trading days after the date of
execution of such Notice of Guaranteed Delivery, all as provided in Section 2 of
the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE FOR
SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH A BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND,
EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, 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.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In such case, new
certificate(s) for the remainder of the Shares that were evidenced by your old
certificate(s) will be sent to you, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the Expiration
Date.
<PAGE> 7
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or purchased are to be issued to a person other than the registered
owner(s). Signatures on such certificates or stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If payment of the purchase price is to be made to, or if certificates for
Shares not tendered or purchased are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person(s) signing this Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder or such person) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check or certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent or such
certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Stockholders tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to such account maintained at a Book-Entry Transfer Facility as such stockholder
may designate hereon. If no such instructions are given, such Shares not
purchased will be returned by crediting the account at the Book-Entry Transfer
Facility designated above.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to, or additional copies of the Offer to Purchase, this Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent at its respective address set forth below or from your broker,
dealer, commercial bank or trust company.
<PAGE> 8
9. WAIVER OF CONDITIONS. Subject to the terms of the Merger Agreement (as
defined in the Offer to Purchase), the conditions of the Offer may be waived by
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, in the case of any Shares tendered.
10. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify whether the stockholder is subject to backup withholding of
Federal income tax. If a tendering stockholder is subject to backup withholding,
the stockholder must cross out item (2) of the Certification box of the
Substitute Form W-9. Failure to provide the information on the Substitute Form
W-9 may subject the tendering stockholder to 31% Federal income tax withholding
on the payment of the purchase price. If the tendering stockholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future, he or she should write "Applied For" in the space provided for
the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For"
is written in Part I, the Depositary will withhold 31% on all payments of the
purchase price, but such withholdings will be refunded if the tendering
stockholder provides a TIN within 60 days.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF), TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under Federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his or her social security number. If a tendering
stockholder is subject to backup withholding, he or she must cross out item (2)
of the Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct TIN, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
<PAGE> 9
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct TIN by completing the
form below certifying that the TIN provided on the Substitute Form W-9 is
correct (or that such stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, the
stockholder should write "Applied For" in the space provided for the TIN in Part
I, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I, the Depositary will withhold 31% on all payments of the purchase price,
but such withholdings will be refunded if the tendering stockholder provides a
TIN within 60 days.
<PAGE> 10
- --------------------------------------------------------------------------------
PAYOR'S NAME:
- --------------------------------------------------------------------------------
-----------------------------------------------------
- --------------------------------------------------------------------------------
SUBSTITUTE
FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
15
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN")
PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
THE RIGHT AND CERTIFY
BY SIGNING AND DATING
BELOW.
PART II -- For Payees exempt from backup withholding, see the attached
Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and
complete as instructed therein.
Social Security Number
----------------------------
OR
Employer Identification
Number
----------------------------
(if awaiting TIN write
"Applied For")
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or a Taxpayer Identification Number has not been issued to me) and either
(a) I have mailed or delivered an application to receive a Taxpayer
Identification Number to the appropriate Internal Revenue Service ("IRS")
or Social Security Administration office or (b) I intend to mail or
deliver an application in the near future. (I understand that if I do not
provide a Taxpayer Identification Number to the Depositary, 31% of all
reportable payments made to me will be withheld, but will be refunded if I
provided a certified Taxpayer Identification Number within 60 days); and
(2) I am not subject to backup withholding either because I have not been
notified by the IRS that I am subject to backup withholding as a result of
a failure to report all interest or dividends, or the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed Guidelines.)
- --------------------------------------------------------------------------------
Name
(Please Print)
Address
(Including Zip Code)
Signature Date
----------------------------------------
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
THE INFORMATION AGENT FOR THE OFFER IS:
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE: (800) 322-2885
<PAGE> 1
(a)(3)
NEWS RELEASE
For: Sterigenics International, Inc.
510-770-9000
Contacts: James F. Clouser
President and CEO, extension 127
Carole-Lynn Glass, extension 126
Pamela Wilkerson, extension 130
FOR IMMEDIATE RELEASE
June 11, 1999
ION BEAM APPLICATIONS TO ACQUIRE STERIGENICS INTERNATIONAL
FOR
$27 PER SHARE IN CASH
FREMONT, CALIFORNIA -- Ion Beam Applications s.a. (IBA), a leading designer
of particle accelerators, based in Belgium, has definitively agreed to acquire
SteriGenics International, Inc. (Nasdaq: STER), a Fremont, California based
provider of high-quality contract Gamma sterilization, microorganism reduction
and radiation processing services. Under the terms of the agreement, the
stockholders of SteriGenics will receive US$27 per share in cash, valuing the
equity of the company at approximately US$235 million. IBA expects to commence a
tender offer for all outstanding shares of SteriGenics within the next 5
business days. The Boards of Directors of both companies have approved the
transaction. IBA, a fast growing particle accelerator equipment provider, made
its first foray into sterilization services through the acquisition in April
1999 of Griffith Micro Sciences, a Chicago-based Eto sterilization services
provider. The acquisition of SteriGenics is designed to permit the delivery of
complementary sterilization technologies to its customer base: "The acquisition
of SteriGenics will allow us to provide our customers increased technology
choices including Eto, Electron Beam, X-Ray and Gamma," added Pierre Mottet, CEO
of IBA. James F. Clouser, the CEO of SteriGenics International, stated that "a
combination of IBA and SteriGenics will help meet the increasing customer
demands for one-stop technology shopping for the medical device sterilization,
food pasteurization and polymer modification industries."
The closing of the acquisition is subject to customary conditions,
including receipt of necessary governmental approvals.
Bear, Stearns International Ltd. Inc. acted as financial advisor to IBA and
PaineWebber, Incorporated, SC Cowen Securities Corporation and TM Capital Corp.
represented SteriGenics International in this transaction.
IBA, based in Louvain-La-Neuve in Belgium, is a world leader in the design
and production of particle accelerators for medicine and industry. It currently
markets 5 different products in three fast-growth, niche markets: medical
imaging, cancer therapy and industrial ionization. IBA is a public company
quoted on the Brussels Stock Exchange.
SteriGenics International, Inc., headquartered in Fremont, California, is a
provider of high-quality contract irradiation and sterilization services, with
20 years of experience in the design and development of gamma irradiation
facilities and equipment. In addition to its Medical Sterilization
Division,serving the healthcare products market, the Company also maintains an
Advanced Applications Division, providing microbial reduction and materials
processing services to a variety of markets such as spices, herbs, botanicals,
cosmetics, fresh foods, nutraceuticals, food and beverage packaging,
semiconductor devices, gemstones and industrial materials. SteriGenics is
expanding its network of irradiation facilities both domestically and
internationally. Upon completion of the Company's Thailand complex and its gamma
plants under construction in the United States, SteriGenics will operate a total
of 18 irradiation processing facilities worldwide.
<PAGE> 2
This press release contains forward-looking statements regarding
SteriGenics' potential markets and business prospects. Because such statements
deal with future events, they are subject to various risks and uncertainties and
actual results may differ materially from SteriGenics' expectations. Facts that
could cause or contribute to differences include, but are not limited to, risks
set forth in SteriGenics' annual report on form 10-K as filed with the
Securities and Exchange Commission on June 29, 1998 and quarterly report on form
10-Q as filed with the Securities and Exchange Commission on February 16, 1999.
<PAGE> 1
(a)(4)
June 10, 1999
Board of Directors
SteriGenics International, Inc.
4020 Clipper Court
Fremont, CA 94538-6540
Gentlemen:
Ion Beam Applications s.a. (the "Purchaser") proposes to make a tender
offer (the "Offer") for all the issued and outstanding shares of the common
stock, par value $0.001 per share (the "Shares"), which are not owned by the
Purchaser or any affiliate thereof, of SteriGenics International, Inc. (the
"Company") at a cash price of $27.00 per Share pursuant to a draft merger
agreement (the "Merger Agreement") which provides that following completion of
the Offer a subsidiary of Purchaser shall merge with the Company and each Share
shall be acquired for consideration equal to that in the Offer.
You have asked us whether or not, in our opinion, the proposed cash
consideration to be received by the shareholders of the Company pursuant to the
Offer is fair to the shareholders of the Company, other than the Purchaser, from
a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the year ended March 31, 1998 and the Company's Form
10-Q and the related unaudited financial information for the nine
months ended December 31, 1998;
(2) Reviewed a draft of the Company's Form 10-K and related financial
information for the fiscal year ended March 31, 1999;
(3) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets and prospects of the
Company, furnished to us by the Company;
(4) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
(5) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be relevant;
(6) Compared the financial position and results of operations of the
Company with that of certain companies which we deemed to be relevant;
(7) Compared the proposed financial terms of the Offer with the financial
terms of certain other mergers and acquisitions which we deemed to be
relevant;
(8) Reviewed the draft Merger Agreement; and
(9) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company,
and we have not assumed any responsibility to independently verify such
information. With respect to the financial forecasts examined by us, we have
assumed that they were reasonably prepared and reflect the best currently
available estimates and good faith judgments of the management of the Company as
to the future performance of the Company. We have also relied upon assurances of
the management of the Company that they are unaware of any facts that would make
the information or financial forecasts provided to us incomplete or misleading.
We have not made any independent evaluation or appraisal of the assets or
liabilities (contingent or otherwise) of the Company nor have we been furnished
with any such evaluations or appraisals. We have also assumed with your consent,
that any material
1
<PAGE> 2
liabilities (contingent or otherwise, known or unknown) of the Company and the
Purchaser are as set forth in the consolidated financial statements of the
Company and the Purchaser, respectively.
This opinion is directed to the Board of Directors of the Company and does
not constitute a recommendation to any shareholder of the Company as to whether
any such shareholder should or should not tender his shares in the Offer. This
opinion does not address the relative merits of the Offer and any other
transactions or business strategies discussed by the Board of Directors of the
Company as alternatives to the Offer or the decision of the Board of Directors
of the Company with respect to the Offer. Our opinion is based on economic,
monetary and market conditions existing on the date hereof.
In the ordinary course of business, PaineWebber Incorporated may trade in
the securities of the Company and the Purchaser for our own account and for the
accounts of our customers and, accordingly, may at any time hold long or short
positions in such securities.
PaineWebber Incorporated is currently acting as financial advisor to the
Company in connection with the Offer and will be receiving a fee in connection
with the rendering of this opinion. In addition, PaineWebber Incorporated will
receive a fee in connection with the consummation of this transaction. In the
past, PaineWebber Incorporated and its affiliates have provided investment
banking and other financial services to the Company and have received fees for
rendering these services.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed cash consideration to be received by the shareholders of the
Company, other than the Purchaser, pursuant to the Offer is fair to the
Company's shareholders from a financial point of view.
This opinion has been prepared for the information of the Board of
Directors of the Company in connection with the Offer and shall not be
reproduced, summarized, described or referred to, provided to any person or
otherwise made public or used for any other purpose without the prior written
consent of PaineWebber Incorporated, provided, however, that this letter may be
reproduced in full in a Schedule 14D-9 filed by the Company related to the
Offer.
Very truly yours,
PAINEWEBBER INCORPORATED
/s/ PaineWebber Incorporated
2
<PAGE> 1
(a)(5)
June 10, 1999
Board of Directors
SteriGenics International, Inc.
4020 Clipper Court
Fremont, CA 94538-6540
Gentlemen:
Ion Beam Applications s.a. (the "Purchaser") proposes to make a tender
offer (the "Offer") for all the issued and outstanding shares of the common
stock, par value $0.001 per share (the "Shares"), which are not owned by the
Purchaser or any affiliate thereof, of SteriGenics International, Inc. (the
"Company") at a cash price of $27.00 per Share pursuant to a draft merger
agreement (the "Merger Agreement") which provides that following completion of
the Offer a subsidiary of Purchaser shall merge with the Company and each Share
shall be acquired for consideration equal to that in the Offer.
You have asked us whether or not, in our opinion, the proposed cash
consideration to be received by the shareholders of the Company pursuant to the
Offer is fair to the shareholders of the Company, other than the Purchaser, from
a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the year ended March 31, 1998 and the Company's Form
10-Q and the related unaudited financial information for the nine
months ended December 31, 1998;
(2) Reviewed a draft of the Company's Form 10-K and related financial
information for the fiscal year ended March 31, 1999;
(3) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets and prospects of the
Company, furnished to us by the Company;
(4) Conducted discussions with members of senior management of the Company
concerning its businesses and prospects;
(5) Reviewed the historical market prices and trading activity for the
Shares and compared them with that of certain publicly traded companies
which we deemed to be relevant;
(6) Compared the financial position and results of operations of the
Company with that of certain companies which we deemed to be relevant;
(7) Compared the proposed financial terms of the Offer with the financial
terms of certain other mergers and acquisitions which we deemed to be
relevant;
(8) Reviewed the draft Merger Agreement; and
(9) Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company,
and we have not assumed any responsibility to independently verify such
information. With respect to the financial forecasts examined by us, we have
assumed that they were reasonably prepared and reflect the best currently
available estimates and good faith judgments of the management of the Company as
to the future performance of the Company. We have also relied upon assurances of
the management of the Company that they are unaware of any facts that would make
the information or financial forecasts provided to us incomplete or misleading.
We have not made any independent
<PAGE> 2
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company nor have we been furnished with any such evaluations or
appraisals. We have also assumed with your consent, that any material
liabilities (contingent or otherwise, known or unknown) of the Company and the
Purchaser are as set forth in the consolidated financial statements of the
Company and the Purchaser, respectively.
This opinion is directed to the Board of Directors of the Company and does
not constitute a recommendation to any shareholder of the Company as to whether
any such shareholder should or should not tender his shares in the Offer. This
opinion does not address the relative merits of the Offer and any other
transactions or business strategies discussed by the Board of Directors of the
Company as alternatives to the Offer or the decision of the Board of Directors
of the Company with respect to the Offer. Our opinion is based on economic,
monetary and market conditions existing on the date hereof.
TM Capital Corp. is currently acting as financial advisor to the Company in
connection with the Offer and will be receiving a fee in connection with the
rendering of this opinion. In addition, TM Capital Corp. will receive a fee in
connection with the consummation of this transaction. TM Capital Corp. has
served and is serving as financial advisor to SteriGenics in connection with
additional merger and acquisition transactions.
On the basis of, and subject to the foregoing, we are of the opinion that
the proposed cash consideration to be received by the shareholders of the
Company, other than the Purchaser, pursuant to the Offer is fair to the
Company's shareholders from a financial point of view.
This opinion has been prepared for the information of the Board of
Directors of the Company in connection with the Offer and shall not be
reproduced, summarized, described or referred to, provided to any person or
otherwise made public or used for any other purpose without the prior written
consent of TM Capital Corp., provided, however, that this letter may be
reproduced in full in a Schedule 14D-9 filed by the Company related to the
Offer.
Very truly yours,
TM CAPITAL CORP.
/s/ MICHAEL S. GOLDMAN
--------------------------------------------------------------------------
Michael S. Goldman
Senior Vice President
<PAGE> 1
[STERIGENICS LOGO] (a)(6)
JUNE 24, 1999
TO THE STOCKHOLDERS OF STERIGENICS INTERNATIONAL, INC.
Dear Stockholder:
I am pleased to report that on June 10, 1999, SteriGenics International,
Inc. ("SteriGenics") entered into a Merger Agreement with Ion Beam Applications,
s.a. a Belgian corporation ("IBA"), Ion Beam Applications G.P., and IBA
Acquisition Corp. ("Purchaser"). Under the terms of the Merger Agreement,
Purchaser has commenced a tender offer (the "Offer") for all outstanding shares
of SteriGenics Common Stock (and associated Preferred Share Purchase Rights)
(the "Shares") at $27.00 per Share in cash. The Offer is currently scheduled to
expire at 12:00 midnight, New York City time, on Thursday, July 15, 1999.
Following the successful completion of the Offer, Purchaser will be merged into
SteriGenics (the "Merger"), and all Shares not purchased in the Offer will be
converted into the right to receive $27.00 per Share in cash, without interest.
YOUR BOARD OF DIRECTORS HAS APPROVED THE OFFER AND THE MERGER AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE
BEST INTERESTS OF STERIGENICS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS
RECOMMENDS THAT ALL STERIGENICS STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors, including without limitation the opinions
of PaineWebber Incorporated and TM Capital Corp., financial advisors to
SteriGenics, that the consideration of $27.00 per Share to be received by the
stockholders pursuant to the Offer and the Merger is fair to SteriGenics
stockholders from a financial point of view. The factors considered by the Board
of Directors are more fully described in the Solicitation/Recommendation
Statement on Schedule 14D-9 filed by SteriGenics with the Securities and
Exchange Commission and enclosed with this letter. We urge you to read carefully
the Schedule 14D-9 in its entirety.
The Offer to Purchase and related materials, including a Letter of
Transmittal for use in tendering Shares has been sent to you separately by IBA.
These documents set forth the terms and conditions of the Offer and provide
instructions as to how to tender your Shares.
We urge you to read the enclosed materials and the IBA materials carefully.
On behalf of the Board of Directors,
Sincerely,
/s/ James F. Clouser
------------------------------------
James F. Clouser
Chairman and Chief Executive Officer
<PAGE> 1
(c)(1)
MERGER AGREEMENT
DATED AS OF JUNE 10, 1999
AMONG
ION BEAM APPLICATIONS S.A.
ION BEAM APPLICATIONS G.P.
IBA ACQUISITION CORP.
AND
STERIGENICS INTERNATIONAL, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 THE OFFER................................................... 1
SECTION 1.1. THE OFFER................................................... 1
SECTION 1.2. COMPANY ACTION.............................................. 2
SECTION 1.3. BOARDS OF DIRECTORS AND COMMITTEES; SECTION 14(f)........... 3
SECTION 1.4 STOCKHOLDERS AGREEMENT...................................... 4
ARTICLE 2 THE MERGER.................................................. 4
SECTION 2.1. THE MERGER.................................................. 4
SECTION 2.2. CLOSING OF THE MERGER....................................... 4
SECTION 2.3. EFFECTIVE TIME.............................................. 4
SECTION 2.4. EFFECTS OF THE MERGER....................................... 4
SECTION 2.5. CHARTER AND BYLAWS.......................................... 4
SECTION 2.6. DIRECTORS................................................... 5
SECTION 2.7. OFFICERS.................................................... 5
SECTION 2.8. CONVERSION OF SHARES........................................ 5
SECTION 2.9. PAYMENT OF CASH MERGER CONSIDERATION........................ 5
SECTION 2.10. STOCK OPTIONS; PURCHASE PLAN................................ 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... 7
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES................ 7
SECTION 3.2. CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES.......... 7
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT; RECOMMENDATION........ 8
SECTION 3.4. SEC REPORTS; FINANCIAL STATEMENTS........................... 8
SECTION 3.5. INFORMATION SUPPLIED........................................ 9
SECTION 3.6. CONSENTS AND APPROVALS; NO VIOLATIONS....................... 9
SECTION 3.7. COMPLIANCE WITH APPLICABLE LAW.............................. 9
SECTION 3.8. NO UNDISCLOSED LIABILITIES; ABSENCE OF CHANGES.............. 10
SECTION 3.9. LITIGATION.................................................. 10
SECTION 3.10. YEAR 2000 COMPLIANCE........................................ 11
SECTION 3.11. EMPLOYEE BENEFIT PLANS, LABOR MATTERS....................... 11
SECTION 3.12. ENVIRONMENTAL LAWS AND REGULATIONS.......................... 12
SECTION 3.13. TAXES....................................................... 12
SECTION 3.14. PROPERTIES.................................................. 13
SECTION 3.15. MATERIAL CONTRACTS AND COMMITMENTS.......................... 14
SECTION 3.16. INTANGIBLE PROPERTY......................................... 14
SECTION 3.17. BROKERS..................................................... 15
SECTION 3.18 CERTAIN BUSINESS PRACTICES.................................. 15
SECTION 3.19. APPLICABILITY OF STATE TAKEOVER STATUTES.................... 15
SECTION 3.20 AMENDMENT TO THE RIGHTS AGREEMENT........................... 15
SECTION 3.21 OPINION OF FINANCIAL ADVISOR................................ 16
SECTION 3.22 EMPLOYEES................................................... 16
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION.... 16
SECTION 4.1. ORGANIZATION................................................ 16
SECTION 4.2. AUTHORITY RELATIVE TO THIS AGREEMENT........................ 16
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.3. INFORMATION SUPPLIED........................................ 17
SECTION 4.4. FINANCING................................................... 17
SECTION 4.5. CONSENTS AND APPROVALS; NO VIOLATIONS....................... 17
ARTICLE 5 COVENANT.................................................... 17
SECTION 5.1. INTERIM OPERATIONS.......................................... 17
SECTION 5.2. STOCKHOLDERS' MEETING....................................... 19
SECTION 5.3. OTHER POTENTIAL ACQUIRERS................................... 19
SECTION 5.4. INTENTIONALLY OMITTED....................................... 21
SECTION 5.5. ACCESS TO INFORMATION....................................... 21
SECTION 5.6. FURTHER ACTIONS............................................. 21
SECTION 5.7. HSR MATTERS................................................. 21
SECTION 5.8. PUBLIC ANNOUNCEMENTS........................................ 22
SECTION 5.9. EMPLOYEE BENEFIT MATTERS; COMPANY STOCK OPTION.............. 22
SECTION 5.10. NOTIFICATION OF CERTAIN MATTERS............................. 22
SECTION 5.11. GUARANTEE OF PERFORMANCE.................................... 22
SECTION 5.12. INDEMNIFICATION, DIRECTORS' AND OFFICERS' INSURANCE......... 22
SECTION 5.13. STATE TAKEOVER LAWS......................................... 23
SECTION 5.14. EMPLOYEE BENEFITS........................................... 23
ARTICLE 6 DISSENTING SHARES; EXCHANGE OF SHARES....................... 23
SECTION 6.1. DISSENTING SHARES........................................... 23
ARTICLE 7 CONDITIONS TO THE OFFER..................................... 23
SECTION 7.1. CONDITIONS TO THE OFFER..................................... 23
ARTICLE 8 CONDITIONS TO CONSUMMATION OF THE MERGER.................... 25
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE
MERGER...................................................... 25
ARTICLE 9 TERMINATION; AMENDMENT; WAIVER.............................. 26
SECTION 9.1. TERMINATION................................................. 26
SECTION 9.2. PROCEDURE AND EFFECT OF TERMINATION......................... 27
SECTION 9.3. FEES AND EXPENSES........................................... 27
SECTION 9.4. AMENDMENT................................................... 28
SECTION 9.5. WAIVER...................................................... 28
ARTICLE 10 MISCELLANEOUS............................................... 28
SECTION 10.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES............... 28
SECTION 10.2. ENTIRE AGREEMENT; ASSIGNMENT................................ 28
SECTION 10.3. VALIDITY.................................................... 28
SECTION 10.4. NOTICES..................................................... 29
SECTION 10.5. GOVERNING LAW............................................... 29
SECTION 10.6. DESCRIPTIVE HEADINGS........................................ 29
SECTION 10.7. PARTIES IN INTEREST......................................... 29
SECTION 10.8. CERTAIN DEFINITIONS......................................... 29
SECTION 10.9. PERSONAL LIABILITY.......................................... 30
SECTION 10.10. SPECIFIC PERFORMANCE........................................ 30
SECTION 10.11. COUNTERPARTS................................................ 30
</TABLE>
ii
<PAGE> 4
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TERM
Acquiring Person............................................ 19
Acquisition................................................. 1
Acquisition Proposal........................................ 24
Affiliate................................................... 37
Agreement................................................... 1
Blue Sky Laws............................................... 11
Board....................................................... 1
Break-Up Fee................................................ 34
Business Day................................................ 37
Cash Merger Consideration................................... 6
Certificates................................................ 7
Closing Time................................................ 5
Company..................................................... 1
Company Disclosure Schedule................................. 8
Company Employee Plan....................................... 13
Company Employee Plans...................................... 13
Company Option Plan......................................... 8
Company Option Plans........................................ 8
Company Personnel........................................... 13
Company Real Assets......................................... 16
Company SEC Reports......................................... 10
Company Securities.......................................... 9
Company Stock Option........................................ 8
Company Stock Options....................................... 8
Confidentiality Agreement................................... 26
Continuing Directors........................................ 5
Contracts................................................... 17
Cure Time................................................... 32
DGCL........................................................ 3
Disclosure Statement........................................ 11
Dissenting Shares........................................... 29
Distribution Date........................................... 3
Effective Time.............................................. 5
Environmental Claim......................................... 15
Environmental Laws.......................................... 14
ERISA....................................................... 13
Exchange Act................................................ 1
Expiration Date............................................. 19
Governmental Entity......................................... 11
GP.......................................................... 1
HSR Act..................................................... 11
Indemnified Parties......................................... 28
Intangible Property......................................... 19
Knowledge................................................... 12
Lien........................................................ 9
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Material Adverse Effect..................................... 9
Material Change............................................. 29
Merger...................................................... 5
Merger Certificate.......................................... 5
Merger Fund................................................. 7
Minimum Stock Condition..................................... 2
Offer....................................................... 1
Offer Documents............................................. 2
Parent...................................................... 1
Parent Material Adverse Effect.............................. 20
Payment Agent............................................... 6
Per Share Amount............................................ 1
Permitted Liens............................................. 16
Person...................................................... 37
Right....................................................... 6
Rights...................................................... 6
Rights Agreement............................................ 6
Schedule 14D-9.............................................. 3
SEC......................................................... 2
Section 203 Approval........................................ 3
Securities Act.............................................. 10
Share....................................................... 1
Shares...................................................... 1
Stock....................................................... 37
Stockholders Agreement...................................... 5
Stockholders' Meeting....................................... 24
Subsidiaries................................................ 37
Subsidiary.................................................. 37
Superior Proposal........................................... 25
Surviving Corporation....................................... 5
Tax......................................................... 15
Tax Return.................................................. 15
Taxes....................................................... 15
Tender Offer Purchase Time.................................. 4
</TABLE>
iv
<PAGE> 6
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") dated as of June 10, 1999, is
among STERIGENICS INTERNATIONAL, INC., a Delaware corporation ("Company"), ION
BEAM APPLICATIONS S.A., a Belgian corporation ("Parent"), ION BEAM APPLICATIONS
G.P. a general partnership organized under the laws of Delaware which is
controlled by Parent ("GP") and IBA ACQUISITION CORP., a Delaware corporation
which is wholly-owned by GP ("Acquisition").
WHEREAS, the Board of Directors of the Company (the "Board") has, in light
of and subject to the terms and conditions set forth herein, (i) determined that
each of the Offer and the Merger (each as defined below) is advisable on
substantially the terms and conditions set forth herein and is fair to the
stockholders of the Company and in the best interests of such stockholders and
(ii) approved and adopted this Agreement and the transactions contemplated
hereby and resolved, subject to the terms hereof, to recommend acceptance of the
Offer and approval and adoption by the stockholders of the Company, if
necessary, of this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall,
within five (5) business days after the public announcement hereof, commence a
tender offer (the "Offer") to acquire all of the issued and outstanding Shares
(defined herein) together with the associated Rights (defined herein) which are
not owned by Parent, GP, or Acquisition or any affiliate thereof, at a price of
$27.00 per Share (subject to adjustment for stock splits, stock dividends,
combinations, recapitalizations or the like) (such amount, being hereinafter
referred to as the "Per Share Amount"), net to the seller in cash, less any
required withholding of taxes, in accordance with the terms and subject to the
conditions provided herein;
NOW THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and intending to be
legally bound hereby, the Company, Parent, GP, and Acquisition hereby agree as
follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 9.1, as promptly as possible but in
no event later than five (5) business days after the public announcement of the
execution hereof by the parties, Parent and GP shall cause Acquisition to
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Offer; and to cause Acquisition to
use its best efforts to consummate the Offer, including, without limitation,
engaging an information agent in connection therewith. Acquisition shall accept
for payment issued and outstanding shares of common stock, $0.001 par value of
the Company (individually a "Share" and collectively, the "Shares") together
with the associated Rights which have been validly tendered and not withdrawn
pursuant to the Offer at the earliest time following expiration of the Offer
that all conditions to the Offer shall have been satisfied or waived by
Acquisition. The obligation of Acquisition to accept for payment, purchase and
pay for Shares tendered pursuant to the Offer shall be subject to the condition
that the number of Shares validly tendered and not withdrawn prior to the
expiration of the Offer, combined with the Shares already owned by Parent, GP,
Acquisition or any of their affiliates, constitutes at least a majority of the
then outstanding Shares on a fully-diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all vested and unvested stock
options, and conversion of convertible securities or other rights to purchase or
acquire Shares) at the expiration of the Offer (the "Minimum Stock Condition")
and the other conditions set forth in Article 7. Acquisition expressly reserves
the right to waive any such condition, to increase the Per Share Amount, and to
make any other changes in the terms and conditions of the Offer; provided,
however, that Parent, GP and Acquisition agree that no change may be made
without the written consent of the Company which decreases the Per Share Amount,
which changes the form of consideration to be paid in the Offer, which reduces
the maximum number of shares to be purchased in the Offer, which reduces the
Minimum Stock Condition to below a majority of the then outstanding shares (on a
fully-diluted basis), which otherwise modifies or amends the conditions to the
Offer or any other term of the Offer in a manner that is materially adverse to
the holders of the Shares, which
<PAGE> 7
imposes conditions to the Offer in addition to those set forth in Article 7 or
which extends the expiration date of the Offer beyond September 30, 1999 (except
that Acquisition may extend the expiration date of the Offer beyond September
30, 1999 as required to comply with any rule, regulation or interpretation of
the Securities and Exchange Commission or to provide the time necessary to
satisfy the conditions set forth in Article 7). It is agreed that the conditions
set forth in Article 7 are for the sole benefit of Acquisition and may be
asserted by Acquisition regardless of the circumstances giving rise to any such
condition (including any action or inaction by Acquisition) or may be waived by
Acquisition, in whole or in part at any time and from time to time, in its sole
discretion. The failure by Acquisition at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. The Per Share Amount shall be paid net to the seller in cash,
less any required withholding of taxes, upon the terms and subject to such
conditions of the Offer. The Company agrees that no Shares held by the Company
or any of its subsidiaries will be tendered in the Offer.
(b) As soon as practicable after the date hereof, Parent, GP and
Acquisition agree that Parent, GP and Acquisition shall file with the Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
with respect to the Offer, which shall include an offer to purchase and form of
transmittal letter (together with any amendments thereof or supplements thereto,
collectively the "Offer Documents"). The Company and its counsel shall be given
a reasonable opportunity to review and comment on the Offer Documents prior to
their filing with the SEC or dissemination to the stockholders of the Company.
Parent and Acquisition agree to provide the Company and its counsel with any
comments which Parent, Acquisition or their counsel may receive from the SEC or
the staff of the SEC with respect to such documents promptly after receipt
thereof. The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws. The information provided and
to be provided by Parent, GP and Acquisition for use in the Offer Documents
shall not, on the date filed with the SEC and on the date first published or
sent or given to the Company's stockholders, as the case may be, contain any
untrue statement of a material fact nor omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, provided,
however, that no representation or warranty is made by Parent, GP or Acquisition
with respect to information supplied by the Company or any of its stockholders
for inclusion in the Offer Documents. The Company agrees that information
provided by the Company or any of its subsidiaries for inclusion or
incorporation in the Offer Documents shall not, on the date filed with the SEC
and on the date first published or sent or given to the Company's stockholders,
as the case may be, contain any untrue statement of a material fact nor omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Parent, GP, Acquisition and the Company each agree
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect and Parent, GP and Acquisition further agree
to take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws.
SECTION 1.2. Company Action. (a) The Company hereby approves of and
consents to the Offer and the Merger and represents and warrants that (i) the
Board has, subject to the terms and conditions set forth herein, adopted final
and binding resolutions, which have not been amended or repealed, pursuant to
which the Board (A) determined that this Agreement, and the transactions
contemplated hereby and thereby, including the Offer and the Merger, are fair
to, and in the best interests of, the stockholders of the Company, (B) approved
and adopted this Agreement, and the Stockholders Agreement (defined herein) and
the transactions contemplated hereby and thereby, including without limitation,
the Merger and the acquisition of Shares by Parent or Acquisition pursuant to
the options granted by the Stockholders under the Stockholders Agreement, and
such approval (the "Section 203 Approval") constitutes the approval of the
foregoing for the purposes of Section 203 of the Delaware General Corporation
Law ("DGCL"), (C) taken all necessary action to avoid the occurrence of a
"Distribution Date" (as defined in the Rights Agreement referred to in Section
2.8) with respect to the Rights, and (D) recommended that the stockholders of
the Company accept the Offer, tender their Shares thereunder to Acquisition and,
if required by law, approve and adopt this Agreement and the Merger (provided,
however, that subject to the provisions of Section 5.3 such
2
<PAGE> 8
recommendation may be withdrawn, modified or amended in connection with a
Superior Proposal (as defined in Section 5.3)) and (ii) PaineWebber Incorporated
and TM Capital Corp. have each delivered to the Board a written opinion to the
effect that, as of the date of such opinion, the consideration to be received by
the holders of the Shares (other than the Parent, GP, Acquisition and their
affiliates) pursuant to the Offer and Merger is fair to such holders from a
financial point of view. Subject only to the provisions of Section 5.3, the
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence.
(b) The Company hereby agrees to file with the SEC as soon as practicable
after the date hereof a Solicitation/Recommendation Statement on Schedule 14D-9
pertaining to the Offer (together with any amendments thereof or supplements
thereto, the "Schedule 14D-9") containing the recommendation described in
Section 1.2(a) and to promptly mail the Schedule 14D-9 to the stockholders of
the Company. The Company represents and warrants that the Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published or sent or given to the Company's stockholders, as the case may be,
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Parent, GP or Acquisition in writing for
inclusion in the Schedule 14D-9. The Company, Parent, GP and Acquisition each
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to the holders of Shares, in each case as and to
the extent required by applicable federal securities laws.
(c) In connection with the Offer, the Company will promptly furnish Parent
and Acquisition with mailing labels, security position listings and any
available listing or computer files containing the names and addresses of the
record holders of the Shares as of a recent date and shall furnish Acquisition
with such additional information and assistance (including, without limitation,
updated lists of stockholders, mailing labels and lists of securities positions)
as Acquisition or its agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent, GP, Acquisition and their affiliates, associates, agents and advisors
shall hold in confidence the information contained in any of such labels and
lists, and use the information contained in any such labels, listings and files
only in connection with the Offer and the Merger, and, if this Agreement shall
be terminated, will deliver to the Company all copies of such information then
in their possession.
SECTION 1.3. Boards of Directors and Committees; Section 14(f). (a)
Promptly upon the purchase by Acquisition of Shares following the expiration
date (as such date may be extended) of, and pursuant to, the Offer (the "Tender
Offer Purchase Time") and from time to time thereafter, and subject to the last
sentence of this Section 1.3(a), Acquisition shall be entitled to designate
directors of the Company constituting a majority of the Board, and the Company
shall use its best efforts to, upon request by Acquisition, promptly, at the
Company's election, either increase the size of the Board to the extent
permitted by its Certificate of Incorporation or secure the resignation of such
number of directors as is necessary to enable Acquisition's designees to be
elected to the Board and to cause Acquisition's designees to be so elected and
to constitute at all times after the Tender Offer Purchase Time a majority of
the Board. At such times, and subject to the last sentence of this Section
1.3(a), the Company will use its best efforts to cause persons designated by
Acquisition to constitute the same percentage as is on the Board of (i) each
committee of the Board (other than any committee of the Board established to
take action under this Agreement), (ii) each board of directors of each
subsidiary of the Company and (iii) each committee of each such board.
Notwithstanding the foregoing, the Company shall use reasonable efforts to
encourage James F. Clouser and Fred Ruegsegger to remain members of the Board
until the Effective Time (as determined herein).
(b) The Company's obligation to appoint designees to the Board shall be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all action required
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pursuant to such Section and Rule in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under such
Section and Rule in order to fulfill its obligations under this Section 1.3.
Acquisition will supply to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, officers, directors and
affiliates required by such Section and Rule.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.3 and prior to the Effective Time, any amendment or
termination of this Agreement, extension of the performance or waiver of the
obligations or other acts of Parent, GP or Acquisition or waiver of the
Company's rights hereunder, shall require the concurrence of a majority of the
Company's directors (or the concurrence of the director, if there is only one
remaining) then in office who are directors on the date hereof, or are directors
(other than directors designated by Acquisition in accordance with this Section
1.3) designated by such persons to fill any vacancy (the "Continuing
Directors").
SECTION 1.4. Stockholders Agreement. In order to induce Parent, GP and
Acquisition to enter into this Agreement and to perform their obligations
hereunder and as a condition thereof, Parent, GP and Acquisition shall enter
into the stockholders agreement (the "Stockholders Agreement") on even date
hereof in the form attached hereto as Exhibit A stockholders of the Company
listed in Schedule A to the Stockholders Agreement.
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. At the Effective Time (as defined below) and upon
the terms and subject to the conditions of this Agreement and in accordance with
the DGCL, Acquisition shall be merged with and into the Company (the "Merger").
Following the Merger, the Company shall continue as the surviving corporation
(the "Surviving Corporation") and the separate corporate existence of
Acquisition shall cease. GP, as the sole stockholder of Acquisition, hereby
approves this Agreement, the Merger and the other transactions contemplated
hereby.
SECTION 2.2. Closing of the Merger. The closing of the Merger will take
place at a time (the "Closing Time") and on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
of the latest to occur of the conditions set forth in Article 8 at the offices
of Dorsey & Whitney LLP, 250 Park Avenue, New York, New York 10177, unless
another time, date or place is agreed to in writing by the parties hereto.
SECTION 2.3. Effective Time. Subject to the terms and conditions set forth
in this Agreement, a certificate of merger (the "Merger Certificate") shall be
duly executed and acknowledged by Acquisition and the Company and thereafter
delivered at the Closing Time to the Secretary of State of the State of Delaware
for filing pursuant to the DGCL. The Merger shall become effective at such time
as a properly executed and certified copy of the Merger Certificate is duly
accepted for record by the Secretary of State of the State of Delaware for
filing pursuant to the DGCL, or such later time as Acquisition and the Company
may agree upon and set forth in the Merger Certificate (not exceeding 30 days
after the Merger Certificate is accepted for record; the time the Merger becomes
effective being referred to herein as the "Effective Time").
SECTION 2.4. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing and subject
thereto at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation and all debts, liabilities and duties of the Company and Acquisition
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.5. Charter and Bylaws. The Certificate of Incorporation of the
Company in effect at the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until amended in accordance with
applicable law. The Bylaws of the Company in effect at the Effective Time shall
be the Bylaws of the Surviving Corporation until amended in accordance with
applicable law.
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SECTION 2.6. Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the charter and Bylaws of the Surviving Corporation until the
next annual meeting of stockholders and until each such director's successor is
duly elected or appointed and qualified.
SECTION 2.7. Officers. The officers of Acquisition at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the charter and Bylaws of the Surviving Corporation until
such officer's successor is duly elected or appointed and qualified.
SECTION 2.8. Conversion of Shares.
(a) At the Effective Time, each Share issued and outstanding immediately
prior to the Effective Time, together with the associated right to purchase
shares of Series A Junior Participating Preferred Stock, par value $0.001 per
share (individually, the "Right" and collectively, the "Rights"), issued
pursuant to the Rights Agreement dated as of March 31, 1999 between the Company
and US Stock Transfer Corporation, as Rights Agent (the "Rights Agreement"
(other than (i) Shares together with any associated Rights held by any of the
Company's subsidiaries, (ii) Shares together with any associated Rights held by
Parent, GP, Acquisition or any other subsidiary of Parent and (iii) Dissenting
Shares (defined herein)) shall, by virtue of the Merger and without any action
on the part of Acquisition, the Company or the holder thereof, be converted into
and shall become the right to receive the Per Share Amount in cash, without
interest (the "Cash Merger Consideration"). Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time, the Shares shall have
been changed into a different number of shares or a different class by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, then the Cash Merger Consideration
contemplated by the Merger shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(b) At the Effective Time, each Share, together with any associated Right,
then owned by Parent, GP, Acquisition, the Company or any direct or indirect
wholly-owned subsidiary of Parent, GP or Acquisition or of the Company shall, by
virtue of the Merger and without any action on the part of Parent, GP,
Acquisition, the Company or the holder thereof, be canceled and retired and will
cease to exist and no payment shall be made with respect thereto.
(c) At the Effective Time, each share of common stock of Acquisition issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one fully-paid and non-assessable share of common stock, par
value $0.001 per share of the Surviving Corporation.
SECTION 2.9. Payment of Cash Merger Consideration.
(a) As of the Effective Time, Acquisition shall deposit with such agent or
agents as may be appointed by Parent and Acquisition (the "Payment Agent") for
the benefit of the holders of Shares in cash the aggregate amount necessary to
pay the Cash Merger Consideration (such cash is hereinafter referred to as the
"Merger Fund") payable pursuant to Section 2.8 in exchange for outstanding
Shares.
(b) As soon as reasonably practicable after the Effective Time, the Payment
Agent shall mail to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates") whose shares were converted into the right to receive the Cash
Merger Consideration pursuant to Section 2.8: (i) a letter of transmittal (which
shall specify that delivery shall be effected and risk of loss and title to the
Certificates shall pass only upon delivery of the Certificates to the Payment
Agent and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify) and (ii) instructions on how to surrender the
Certificates in exchange for the Cash Merger Consideration. Upon surrender to
the Payment Agent of a Certificate for cancellation, together with such letter
of transmittal duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor a check representing the Cash Merger
Consideration which such holder has the right to receive pursuant to the
provisions of this Article 2 and the Certificate so surrendered shall forthwith
be canceled. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company, payment of the Cash Merger
Consideration may be made to a transferee if the Certificate representing such
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Shares is presented to the Payment Agent accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.9, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Cash Merger
Consideration as contemplated by this Section 2.9.
(c) In the event that any Certificate shall have been lost, stolen or
destroyed, the Payment Agent shall issue in exchange therefor, upon the making
of an affidavit of that fact by the holder thereof, such Cash Merger
Consideration as may be required pursuant to this Agreement; provided, however,
that Acquisition or its Payment Agent may, in its discretion, require the
delivery of a suitable bond or indemnity.
(d) All Cash Merger Consideration paid upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been paid in
full satisfaction of all rights pertaining to such Shares; subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have been
declared or made by the Company on such Shares in accordance with the terms of
this Agreement, or prior to the date hereof and which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If after the Effective Time
Certificates are presented to the Surviving Corporation for any reason they
shall be canceled and exchanged as provided in this Article 2.
(e) Any portion of the Merger Fund which remains undistributed to the
stockholders of the Company for six months after the Effective Time shall be
delivered to Parent upon demand and any stockholders of the Company who have not
theretofore complied with this Article 2 shall thereafter look only to Parent
for payment of their claim for the Cash Merger Consideration.
(f) Neither Acquisition nor the Company shall be liable to any holder of
Shares for cash from the Merger Fund delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
SECTION 2.10. Stock Options; Purchase Plan.
(a) At the Effective Time, each outstanding option to purchase Shares (a
"Company Stock Option" or collectively "Company Stock Options") issued pursuant
to the Company's 1997 Equity Incentive Plan and its Second Amended and Restated
1986 Stock Option Plan (a "Company Option Plan" or collectively "Company Option
Plans") shall vest in full and the Surviving Corporation shall pay to the holder
of each outstanding Company Stock Option an amount equal to the excess, if any,
of the Per Share Amount over the exercise price per Share of such Company Stock
Option, less the amount of Taxes (defined below) required to be withheld under
Federal, state or local laws and regulations multiplied by the number of Shares
subject to such Company Stock Option. To the extent required the Company will
take all reasonable steps to effectuate the foregoing provisions of this Section
2.10.
(b) Except as provided herein or as otherwise agreed to by the parties and
to the extent permitted by the Company Option Plan, the Company Option Plans
shall terminate as of the Effective Time and any rights under any provisions
under the Company Option Plans and any awards issued thereunder shall be
canceled as of the Effective Time.
(c) The Company shall amend the 1997 Employee Stock Purchase Plan to
provide for (A) the suspension of participation during the offering periods
commencing subsequent to the date of the Agreement for the pendency of the
Merger and subject to the successful consummation of the Merger and (B) the
termination of such Plan as of the Effective Time.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule previously delivered by the
Company to Parent (the "Company Disclosure Schedule"), the Company hereby
represents and warrants to each of Parent, GP and Acquisition as follows:
SECTION 3.1. Organization and Qualification; Subsidiaries.
(a) Section 3.1 of the Company Disclosure Schedule identifies each
subsidiary of the Company as of the date hereof and its respective jurisdiction
of incorporation or organization, as the case may be. The Company and each of
its subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization as set forth
in Section 3.1 of the Company Disclosure Schedule and has all requisite power
and authority to own lease and operate its properties and to carry on its
businesses as now being conducted, except where such failure to so qualify would
not have a Material Adverse Effect (defined herein) on the Company. The Company
has heretofore provided Parent with access to accurate and complete copies of
the charter and Bylaws (or similar governing documents), as currently in effect,
of the Company and its subsidiaries.
(b) Except as disclosed in Section 3.1(b) of the Company Disclosure
Schedule, each of the Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect on the Company. When used in connection with
the Company or its subsidiaries, the term "Material Adverse Effect" means any
change or effect (i) that is materially adverse to the business, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as whole, or (ii) that would materially impair the ability
of the Company to consummate the transactions contemplated hereby.
SECTION 3.2. Capitalization of the Company and its Subsidiaries.
(a) As of the date hereof, the authorized stock of the Company consists of
15,000,000 Shares, of which, as of May 31, 1999, 8,005,802 Shares were issued
and outstanding, and 1,000,000 shares of preferred stock, par value $0.001 per
share, no shares of which are outstanding. All of the outstanding Shares have
been validly issued and are fully paid, nonassessable and free of preemptive
rights. As of May 31, 1999, approximately 1,182,210 Shares were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding Company Stock Options issued pursuant to the Company
Option Plans referred to in Section 2.10. Between May 31, 1999 and the date
hereof, no shares of the Company's stock have been issued other than pursuant to
Company Stock Options, and between May 31, 1999 and the date hereof no stock
options have been granted. Except as set forth above and in Section 3.2(a) of
the Company Disclosure Schedule, as of the date hereof, there are issued,
reserved for issuance, or outstanding (i) no shares of stock or other voting
securities of the Company, (ii) no securities of the Company or its subsidiaries
convertible into or exchangeable for shares of stock or voting securities of the
Company, (iii) no options or other rights to acquire from the Company or its
subsidiaries and, except as described in the Company SEC Reports (defined
herein), no obligations of the Company or its subsidiaries to issue any stock,
voting securities or securities convertible into or exchangeable for stock or
voting securities of the Company, (iv) no bonds, debentures, notes or other
indebtedness or obligations of the Company or any of its subsidiaries entitling
the holders thereof to have the right to vote (or which are convertible into, or
exercisable or exchangeable for, securities entitling the holders thereof to
have the right to vote) with the stockholders of the Company or any of its
subsidiaries on any matter, (v) no equity equivalent interests in the ownership
or earnings of the Company or its subsidiaries or other similar rights, and (vi)
the Rights (collectively "Company Securities"). As of the date hereof, there are
no outstanding obligations of the Company or its subsidiaries (absolute,
contingent or otherwise) to repurchase, redeem or otherwise acquire any Company
Securities. There are no Shares outstanding subject to rights of first refusal
of the Company, nor are there any pre-emptive rights with respect to any Shares.
Other than this Agreement, there are no stockholder agreements, voting trusts or
other agreements or understandings
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to which the Company is a party or by which it is bound relating to the voting
or registration of any shares of stock of the Company.
(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding stock of the Company's subsidiaries is owned by
the Company, directly or indirectly, free and clear of any Lien (defined herein)
or any other limitation or restriction (including any restriction on the right
to vote or sell the same except as may be provided as a matter of law). There
are no securities of the Company or its subsidiaries convertible into or
exchangeable for, no options or other rights to acquire from the Company or its
subsidiaries and no other contract, understanding, arrangement or obligation
(whether or not contingent) providing for, the issuance or sale, directly or
indirectly, of any stock or other ownership interests in, or any other
securities of any subsidiary of, the Company. There are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company.
For purposes of this Agreement, "Lien" means, with respect to any asset
(including without limitation any security), any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset.
(c) The Shares and the Rights constitute the only classes of equity
securities of the Company or its subsidiaries registered or required to be
registered under the Exchange Act.
SECTION 3.3. Authority Relative to this Agreement; Recommendation.
The Company has all necessary corporate power and authority to execute and
deliver this Agreement and, if required by law, subject to stockholder approval
of the Merger, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
except, if required by law, the approval and adoption of this Agreement and the
Merger by the holders of the outstanding Shares. This Agreement has been duly
and validly executed and delivered by the Company and assuming the due
authorization, execution and delivery by Parent, GP and Acquisition, constitutes
a valid, legal and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equitable remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principle is applied in a proceeding at law or in equity).
The Board has duly and validly approved, and taken all corporate actions
required to be taken by the Board for the consummation of, the transactions
contemplated hereby, including the Offer and the acquisition of the Shares
pursuant thereto and the Merger. The Board has taken all appropriate action so
that none of Parent, GP or Acquisition will be an "interested stockholder"
within the meaning of Section 203 of the DGCL by virtue of Parent, GP,
Acquisition and the Company entering into this Agreement, or the Stockholders
Agreement or any other agreement contemplated hereby or thereby and consummating
the transactions contemplated hereby and thereby.
SECTION 3.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents
("Company SEC Reports") with the SEC since its initial public offering on August
13, 1997, each of which has complied in all material respects with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, each as in effect on the dates such
forms, reports and documents were filed. None of such Company SEC Reports,
including, without limitation, any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements of the Company
included in the Company SEC Reports fairly present in
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conformity with GAAP (except as may be indicated in the notes thereto or, in the
case of unaudited consolidated quarterly statements, as permitted by Form 10-Q
of the SEC) the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended.
(b) The Company has heretofore made available or promptly will make
available to Acquisition or Parent a complete and correct copy of any amendments
or modifications which are required to be filed with the SEC but have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Exchange
Act.
SECTION 3.5. Information Supplied. Neither the Schedule 14D-9 nor any of
the information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents, Schedule 14D-9, any other
tender offer materials, Schedule 14A or 14C, or the proxy statement or
information statement ("Proxy Statement") relating to any meeting of the
Company's stockholders to be held in connection with the Merger (all of the
foregoing documents, collectively, the "Disclosure Statements") will, at the
date each and any of the Disclosure Statements is filed with the SEC or are
first published, mailed to stockholders of the Company, and at the time of the
meeting of stockholders of the Company to be held, if necessary, in connection
with the Merger (the "Stockholders' Meeting" (defined herein)) contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading; provided,
however, that no representation or warranty is made by the Company with respect
to information supplied by Parent, Acquisition or GP, for inclusion in the
Disclosure Statements. The Disclosure Statements will comply as to form in all
material respects with all provisions of applicable law.
SECTION 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state securities laws ("Blue
Sky Laws"), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the securities or antitrust laws of any foreign country,
and the filing and recordation and acceptance for record of the Merger
Certificate as required by the DGCL, respectively, no filing with or notice to
and no permit, authorization, consent or approval of any court or tribunal, or
administrative governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect. Neither the execution, delivery
and performance of this Agreement by the Company nor the consummation by the
Company of the transactions contemplated hereby will (i) conflict with or result
in any breach of any provision of the respective charter or Bylaws (or similar
governing documents) of the Company or any of its subsidiaries, (ii) result in a
violation or breach of or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) conflict with or violate any order,
writ, injunction, decree, law, statute, rule or regulation applicable to the
Company or any of its subsidiaries or any of their respective properties or
assets except, in the case of (ii) or (iii), for violations, breaches or
defaults which would not have a Material Adverse Effect.
SECTION 3.7. Compliance with Applicable Law. Neither the Company nor any of
its subsidiaries is in conflict with, or in default or violation of (a) its
respective charter or certificate of incorporation, bylaws, or other charter or
organization documents, (b) to the Company's Knowledge (defined herein), any
law, statute, rule, regulation, order, judgment, writ, injunction or decree
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (c) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any property or asset of the Company or
any of its subsidiaries may be bound or affected, in the case of (b) or (c), the
effect of which conflict, default or violation, either individually or in the
aggregate, would be reasonably likely to be a
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Material Adverse Effect. To the Company's Knowledge, the Company and its
subsidiaries hold all material licenses, permits, approvals and other
authorizations of Governmental Entities, and are in substantial compliance with
all applicable laws and governmental regulations in connection with their
businesses as now being conducted (except where such non-compliance would not
have a Material Adverse Effect on the Company). For the purposes hereof, the
term "Knowledge" with respect to the Company means the actual knowledge of the
officers and directors of the Company including knowledge obtained in the
ordinary course of the operation of the business of the Company from the
managers of the facilities of the Company.
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes. Except to the
extent publicly disclosed in the Company's SEC Reports or in the Company
Disclosure Schedule, as of December 31, 1998, none of the Company or any of its
subsidiaries had any material liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, that would be required by GAAP to be
reflected on a consolidated balance sheet of the Company and its subsidiaries
(including the notes thereto) or which would have a Material Adverse Effect on
the Company and since such date, the Company has incurred no such liability or
obligation. Since December 31, 1998, except as disclosed in the Company SEC
Reports, (a) the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course and in a manner consistent with past
practice and (b) there has not been (i) any change, event, occurrence or
circumstance in the business, operations, properties, financial condition or
results of operations of the Company or any of its subsidiaries which,
individually or in the aggregate, has a Material Adverse Effect on the Company
(except for changes, events, occurrences or circumstances (A) with respect to
general economic conditions or (B) arising as a result of the transactions
contemplated hereby), (ii) any material change by the Company in its accounting
methods, principles or practices, (iii) any authorization, declaration, setting
aside or payment of any dividend or distribution or capital return in respect of
any stock of, or other equity interest in, the Company or any of its
subsidiaries, (iv) any material revaluation for financial statement purposes by
the Company or any of its subsidiaries of any asset (including, without
limitation, any writing down of the value of any property, investment or asset
or writing off of notes or accounts receivable), (v) other than payment of
compensation for services rendered to the Company or any of its subsidiaries in
the ordinary course of business consistent with past practice or the grant of
Company Stock Options as described in (and in amounts consistent with) Section
3.2, any material transactions between the Company or any of its subsidiaries,
on the one hand, and any (A) officer or director of the Company or any of its
subsidiaries, (B) record or beneficial owner of five percent (5%) or more of the
voting securities of the Company, or (C) affiliate of any such officer, director
or beneficial owner, on the other hand, or (vi) other than pursuant to the terms
of the plans, programs or arrangements specifically referred to in Section 3.11
or Section 3.11 of the Company Disclosure Schedule or in the ordinary course of
business consistent with past practice, any increase in or establishment of any
bonus, insurance, welfare, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance awards or
restricted stock awards), stock purchase or other employee benefit plan, or any
other increase in the compensation payable or to become payable to any
employees, officers, directors or consultants of the Company or any of its
subsidiaries, which increase or establishment, individually or in the aggregate,
will result in a material liability.
SECTION 3.9. Litigation. Except as publicly disclosed in the Company SEC
Reports, there is no suit, claim, action, proceeding or investigation pending
or, to the Company's Knowledge, threatened against the Company or any of its
subsidiaries or any of their respective properties or assets before any
Governmental Entity which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect on the Company or could reasonably be
expected to prevent or delay the consummation of the transactions contemplated
by this Agreement. Except as publicly disclosed by the Company in the Company
SEC Reports, none of the Company or its subsidiaries nor any property or asset
of the Company or any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree which insofar as can be reasonably foreseen in the
future could reasonably be expected to have a Material Adverse Effect on the
Company or could reasonably be expected to prevent or delay the consummation of
the transactions contemplated hereby.
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SECTION 3.10. Year 2000 Compliance. To the Company's Knowledge, the
disclosure contained in the Company's quarterly report on Form 10-Q for the
quarter ended December 31, 1998 does not contain any material misstatement or
omission regarding the status of the Company's Year 2000 readiness.
SECTION 3.11. Employee Benefit Plans; Labor Matters
(a) Section 3.11(a) of the Company Disclosure Schedule sets forth each plan
which is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and each other material agreement, arrangement or commitment
which is an employment or consulting agreement, executive or incentive
compensation plan, bonus plan, deferred compensation agreement, employee
pension, profit sharing, savings or retirement plan, employee stock option or
stock purchase plan, group life, health, or accident insurance or other employee
benefit plan, agreement, arrangement or commitment, including, without
limitation, severance, vacation, holiday or other bonus plans, currently
maintained by the Company or any of its subsidiaries for the benefit of any
present or former employees, officers or directors of the Company or any of its
subsidiaries ("Company Personnel") or with respect to which the Company or any
of its subsidiaries has liability or makes or has an obligation to make
contributions (each such plan, agreement, arrangement or commitment set forth in
Section 3.11(a) of the Company Disclosure Schedule being hereinafter referred to
as a "Company Employee Plan").
(b) With respect to each Company Employee Plan maintained or contributed to
by the Company or any trade or business which is under common control with the
Company within the meaning of Section 414 of the Code (the "Company Employee
Plans"), the Company has made available to Parent a true and complete copy of,
to the extent applicable, (i) such Company Employee Plan, (ii) the most recent
annual report (Form 5500), (iii) each trust agreement related to such Company
Employee Plan, (iv) the most recent summary plan description for each Company
Employee Plan for which such a description is required, (v) the most recent
actuarial report relating to any Company Employee Plan subject to Title IV of
ERISA and (vi) the most recent IRS determination letter issued with respect to
any Company Employee Plan that is intended to qualify under Section 401(a) of
the Code.
(c) Each Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the IRS
covering the provisions of the Tax Reform Act of 1986 stating that such Company
Employee Plan is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the qualified status of such
plan. Each Company Employee Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law (except as
would not have a Material Adverse Effect on the Company). Neither the Company
nor any ERISA Affiliate of the Company has incurred or is reasonably expected to
incur any liability under Title IV of ERISA in connection with any Company
Employee Plan (except as would not have a material effect on the Company).
(d) To the Company's Knowledge, no employee of the Company or any of its
subsidiaries (i) is in violation of any term of any employment contract, patent
disclosure agreement, noncompetition agreement, or any restrictive covenant with
a former employer relating to the right of any such employee to be employed by
the Company or any of its subsidiaries because of the nature of the business
conducted or presently proposed to be conducted by the Company or any of its
subsidiaries or to the use of trade secrets or proprietary information of others
and (ii) has given notice to the Company or any of its subsidiaries, that any
employee intends to terminate his or her employment with the Company except for
terminations of a nature and number that are consistent with the Company's prior
experience. Neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
Company Personnel. To the Company's Knowledge, there are no activities or
proceedings of any labor union to organize any employees of the Company or any
of its subsidiaries and there are no strikes, or material slowdowns, work
stoppages or lockouts, or threats thereof by or with respect to any employees of
the Company or any of its subsidiaries. The Company and its subsidiaries are and
have been in compliance with all applicable laws regarding employment practices,
terms and conditions of employment, and wages and hours (including, without
limitation, OSHA, ERISA, WARN or any similar state or local law) (except as
would not have a Material Adverse Effect on the Company).
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(e) Except as disclosed in Section 3.11(e) of the Company Disclosure
Schedule, the transactions contemplated by this Agreement (either alone or
together with any other transaction(s) or event(s)) will not (i) entitle any
Company Personnel to severance pay or other similar payments under any Company
Employee Plan, (ii) accelerate the time of payment or vesting or increase the
amount of benefits due under any Company Employee Plan or compensation to any
Company Personnel, (iii) result in any payments (including parachute payments)
under any Company Employee Plan becoming due to any Company Personnel, or (iv)
terminate or modify or give a third party a right to terminate or modify the
provisions or terms of any Company Employee Plan.
SECTION 3.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed in the Company SEC Reports, to the
Company's Knowledge, (i) the properties, assets and operations of the Company
and its subsidiaries are in material compliance with all applicable federal,
state, local and foreign laws and regulations, orders, decrees, judgments,
permits and licenses relating to public and worker health and safety and to the
protection and clean-up of the natural environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) and activities or conditions relating thereto, including, without
limitation, those relating to the generation, handling, disposal, transportation
or release of hazardous materials (collectively "Environmental Laws"), except
for non-compliance that would not have a Material Adverse Effect, which
compliance includes but is not limited to, the possession by the Company and its
subsidiaries of all material permits and other governmental authorizations
required under applicable Environmental Laws and compliance with the terms and
conditions thereof; (ii) none of the Company or its subsidiaries has received
written notice of or, to the Company's Knowledge, is the subject of any
Environmental Claim (defined below) that could reasonably be expected to have a
Material Adverse Effect on the Company; and (iii) to the Company's Knowledge,
there are no circumstances that are reasonably likely to prevent or interfere
with such material compliance in the future.
(b) Except as disclosed in the Company SEC Reports, there is no action,
cause of action, claim, investigation, demand or notice by any person or entity
alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim") which could reasonably be expected to have a Material
Adverse Effect that is pending or, to the Company's Knowledge, threatened
against the Company or its subsidiaries or, to the Company's Knowledge, against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has or may have retained or assumed either contractually
or by operation of law.
SECTION 3.13. Taxes
(a) For purposes of this Agreement: (i) "Tax" or "Taxes" means any taxes,
charges, fees, levies, or other assessments imposed by any U.S. or foreign
governmental entity, whether national, state, county, local or other political
subdivision, including, without limitation, all net income, gross income, sales
and use, rent and occupancy, value added, ad valorem, transfer, gains, profits,
excise, franchise, real and personal property, gross receipt, capital stock,
business and occupation, disability, employment, payroll, license, estimated, or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties on or additions to any such taxes (and includes taxes
for which the Company and/or any of its subsidiaries, as the case may be, may be
liable in its own right, or as the transferee of the assets of, or as successor
to, any other corporation, association, partnership, joint venture, or other
entity, or under Treasury Regulation Section 1.1502-6 or any similar provision
of foreign, state or local law); and (ii) "Tax Return" means a report, return or
other information required to be supplied to a governmental entity with respect
to Taxes including, where permitted or required, group, combined or consolidated
returns for any group of entities that includes the Company or any of its
subsidiaries.
(b) Except as set forth in Section 3.13(b) of the Company Disclosure
Schedule, the Company and each of its subsidiaries, and any affiliated or
combined group of which the Company or any of its subsidiaries is or was a
member for applicable Tax purposes, have (i) filed all federal income and all
other Tax Returns required to be filed by applicable law and all such federal
income and other Tax Returns (A) reflect the liability for Taxes of the Company
and each of its subsidiaries except to the extent that a reserve for Taxes is
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reflected on the balance sheet or the notes thereto including in the most recent
consolidated financial statements of the Company and its subsidiaries contained
in the Company SEC Reports, and (B) were filed on a timely basis and (ii) within
the time and in the manner prescribed by law, paid (and until the Closing Time
will pay within the time and in the manner prescribed by law) all Taxes that
were or are due and payable as set forth in such Tax Returns.
(c) Each of the Company and, where applicable, the Company's subsidiaries
has established (and until the Closing Time will maintain on at least a
quarterly basis) on its books and records reserves adequate to pay all Taxes of
the Company or such respective subsidiary, as the case may be, in accordance
with GAAP, which are reflected in the most recent consolidated financial
statements of the Company and its subsidiaries contained in the Company SEC
Reports, as applicable, to the extent required by GAAP.
(d) Except as disclosed in Section 3.13(d) of the Company Disclosure
Schedule, neither the Company nor any subsidiary thereof has requested any
extension of time within which to file any income, franchise or other Tax
Return, which Tax Return has not been filed as of the date hereof.
(e) Except as disclosed in Section 3.13(e) of the Company Disclosure
Schedule, neither the Company nor any subsidiary thereof has executed any
outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any income, franchise or other Taxes or
Tax Returns.
(f) Except as disclosed in Section 3.13(f) of the Company Disclosure
Schedule, no deficiency for any Tax which, alone or in the aggregate with any
other deficiency or deficiencies, would exceed $250,000, has been proposed in
writing, asserted in writing, or assessed against the Company and/or any
subsidiary thereof that has not been resolved and paid in full or otherwise
settled, no audits or other administrative proceedings are presently in progress
or, to the Company's Knowledge, pending, or threatened in writing with regard to
any Taxes or Tax Returns of the Company and/or any subsidiary thereof, and no
written claim is currently being made by any authority in a jurisdiction where
any of the Company or any subsidiary thereof, as the case may be, does not file
Tax Returns that it is or may be subject to Tax in that jurisdiction.
(g) Except as disclosed on Section 3.13(g) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement relating to allocating or sharing of the payment of, or liability for,
Taxes except an agreement between or among solely the Company and one or more of
such subsidiaries or between such subsidiaries.
(h) The Company does not constitute and for the past five years has not
constituted a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
SECTION 3.14. Properties. Section 3.14 of the Company Disclosure Schedule
contains a true and complete list (identifying the relevant owners, lessors and
lessees) of all real properties owned by the Company or any of its subsidiaries.
Each of the Company and its subsidiaries has good and marketable title to all
properties, assets and rights of any kind whatsoever (whether real, personal or
mixed, and whether tangible or intangible) owned by it (collectively, the
"Company Real Assets"), in each case free and clear of any material mortgage,
security interest, deed of trust, claim, charge, title defect or other lien or
encumbrance, except (a) as shown on the consolidated balance sheet of the
Company and its subsidiaries dated December 31, 1998 and the notes thereto, (b)
for any mortgage, security interest, deed of trust, claim, charge, title defect
or other lien or encumbrance arising by reason of (i) taxes, assessments or
governmental charges not yet delinquent or which are being contested in good
faith, (ii) deposits to secure public or statutory obligations in lieu of surety
or appeal bonds entered into in the ordinary course of business, (iii) operation
of law in favor of carriers, warehousemen, landlords, mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of business
for sums which are not yet delinquent or are being contested in good faith by
negotiations or by appropriate proceedings which suspend the collection thereof
and (iv) matters of public record not having a material adverse effect in the
use or marketability of the Company Real Assets ("Permitted Liens"), or (c) as
set forth on Section 3.14 of the Company Disclosure Schedule. There are no
pending or, to the Company's Knowledge, threatened condemnation proceedings
against or affecting any material Company Real Assets, and none of the material
Company Real Assets is subject to any commitment or other arrangement for its
sale to a third party outside the ordinary course of business.
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SECTION 3.15. Material Contracts and Commitments.
(a) Section 3.15 of the Company Disclosure Schedule contains a true and
complete list of all of the following contracts, agreements and commitments,
whether oral or written ("Contracts"), to which the Company or any of its
subsidiaries is a party or by which any of them or any of their material Company
Real Assets is bound, as each such contract or commitment may have been amended,
modified or supplemented:
(i) all Contracts pursuant to which the Company or its subsidiaries
holds a leasehold interest in or otherwise has an economic interest in any
real property, other than property described in Section 3.14 of the Company
Disclosure Schedule;
(ii) all Contracts granting or obtaining a franchise or license to
utilize a brand name or other rights of a system providing sterilization
services, or granting or obtaining a license or sublicense of any material
trademark, trade name, copyright, patent, service mark, or trade secret, or
any rights therein or application therefor other than for contracts related
to packaged software for the Company's internal use;
(iii) all partnership or joint venture Contracts;
(iv) all loan agreements, notes, bonds, debentures, debt instruments,
evidences of indebtedness, debt securities, or other Contracts relating to
any indebtedness of the Company or any of its subsidiaries in an amount in
excess of $250,000, or involving the direct or indirect guaranty or
suretyship by the Company or any of its subsidiaries of any indebtedness in
an amount in excess of $250,000;
(v) all Contracts that, after the date hereof, obligate the Company or
any of its subsidiaries to pay, pledge, or encumber or restrict assets in
an aggregate amount in excess of $250,000, except with respect to such
Contracts entered into in connection with facilities currently under
construction in which case such excess amount shall be $1,000,000;
(vi) all Contracts by which the Company has committed to extend credit
to third parties other than Contracts entered into with customers in the
ordinary course of business;
(vii) all Contracts with the 25 largest (based on revenue paid to the
Company) customers of the Company during the fiscal year ended March 31,
1999; and
(viii) all Contracts that limit or restrict the ability of the Company
or any of its subsidiaries to compete or otherwise to conduct business in
any material manner or place.
(b) The Company has heretofore made available to the Parent true and
complete copies of all of the Contracts required to be set forth in Section 3.15
of the Company Disclosure Schedule except those required by Section 3.15(vii)
which will be provided to Parent as soon as is practicable after the date
hereof. Each such Contract is valid and binding in accordance with its terms,
and is in full force and effect (except as set forth in Section 3.15 of the
Company Disclosure Schedule), provided that foregoing representation is to the
Company's Knowledge with respect to the other parties to such Contracts. Neither
the Company nor any of its subsidiaries is in default in any material respect
with respect to any such Contract, nor does any condition exist that with notice
or lapse of time or both would constitute such a material default thereunder or
permit any other party thereto to terminate such Contract. To the Company's
Knowledge, no other party to any such Contract is in default in any material
respect with respect to any such Contract. No party has given any written notice
(i) of termination or cancellation of any such Contract or (ii) that it intends
to assert a breach of any such Contract, whether as a result of the transactions
contemplated hereby or otherwise. Each Contract identified in Section 3.15 of
the Company Disclosure Schedule in response to any item under this Section 3.15
shall be deemed incorporated by reference to all other items in this Section
3.15.
SECTION 3.16. Intangible Property.
(a) The Company has made available to the Parent a list of the Intangible
Property (as defined below) which is material to the Company and its
subsidiaries in which the Company or any of its subsidiaries has an interest.
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(b) Except as set forth on Section 3.16 of the Company Disclosure Schedule:
(i) the Company and its subsidiaries own or have the right to use, all
material Intangible Property used in the conduct of their business as
presently conducted;
(ii) the Company and its subsidiaries have performed all material
obligations required to be performed by them, and are not in default under
any material contract or arrangement relating to any material Intangible
Property;
(iii) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not breach,
violate or conflict with any agreement related to any material Intangible
Property, will not cause the forfeiture or termination or give rise to a
right of forfeiture or termination of, or in any material way impair the
right of the Company or any of its subsidiaries to use, sell, license or
dispose of or to bring any action for the infringement of, any material
Intangible Property or material portion thereof;
(iv) there are no royalties, honoraria, fees or other payments payable
by the Company or any of its subsidiaries to any person by reason of the
ownership, use, license, sale or disposition of any material Intangible
Property;
(v) the conduct of the business by the Company and its subsidiaries
does not violate any material license or agreement with any third party;
and
(vi) neither the Company nor any of its subsidiaries has received any
notice to the effect (or is otherwise aware) that any material Intangible
Property or the use thereof by the Company or any of its subsidiaries
conflicts with any rights of any person.
(c) As used herein "Intangible Property" means all patents, patent
applications (pending or otherwise), material internally developed (including by
third parties) computer software, registered copyrights, and currently used
brand names, service marks, trademarks, tradenames, and all registrations or
applications for registration of any of the foregoing.
SECTION 3.17. Brokers. No broker, finder or investment banker (other than
PaineWebber Incorporated, TM Capital Corp. and SG Cowen Securities Corporation,
the Company's financial advisers, a true and correct copy of whose entire
engagement agreements have been provided to Parent) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
SECTION 3.18. Certain Business Practices. None of the Company, any of its
subsidiaries or any directors or officers of the Company or any of its
subsidiaries (provided that as to the directors and officers of the Company's
Thailand subsidiary such representation is made to the Company's Knowledge), nor
to the Company's Knowledge, agents or employees of the Company or any of its
subsidiaries, has (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity, (b) made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended, or (c) made any other
unlawful payment.
SECTION 3.19. Applicability of State Takeover Statutes. The Section 203
Approval is valid and in full force and effect. Section 203 of the DGCL will not
apply to this Agreement, the Stockholders Agreement, the Offer or the
acquisition of shares pursuant to the Offer or the Stockholders Agreement or the
Merger. No other state takeover statute or similar statute or regulation applies
or purports to apply to this Agreement, the Stockholders Agreement, the Offer,
Merger or the other transactions contemplated hereby or thereby.
SECTION 3.20. Amendment to the Rights Agreement. The Company's Board of
Directors has taken all necessary action (including any amendment thereof) under
the Rights Agreement so that (x) none of the execution or delivery of this
Agreement, or the Stockholders Agreement, consummation of the Offer, or any of
the other transactions contemplated hereby or thereby will cause (i) the Rights
to become exercisable under the Rights Agreement, (ii) Parent, GP or Acquisition
to be deemed an "Acquiring Person" (as defined in the
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Rights Agreement), or (iii) the "Distribution Date" (as defined in the Rights
Agreement) to occur upon any such event and (y) the "Expiration Date" (as
defined in the Rights Agreement) of the Rights shall occur immediately prior to
the Effective Time.
SECTION 3.21. Opinion of Financial Advisor. The Company has received the
opinion of PaineWebber Incorporated and TM Capital Corp. to the effect that, as
of the date of this Agreement, the consideration to be received in the Offer and
the Merger by the Company's stockholders is fair to the Company's stockholders
from a financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to Parent.
The Company has been authorized by PaineWebber Incorporated and TM Capital Corp.
to permit the inclusion of such opinion in its entirety in the Offer Documents
and the Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in
form and substance reasonably satisfactory to PaineWebber Incorporated and TM
Capital Corp. and its counsel.
SECTION 3.22. Employees. Section 3.22 of the Company Disclosure Schedule
sets forth the following information concerning each employee of the Company
whose base annual salary is in excess of $50,000: (a) name; (b) position; (c)
current base salary; and (d) whether such employee has an employment agreement
and, if so, its expiration date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the Company as
follows:
SECTION 4.1. Organization.
(a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the Kingdom of Belgium, GP is a general partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware and Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and each
has all requisite power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted. Each of Parent and
Acquisition has heretofore delivered to the Company accurate and complete copies
of its Certificates of Incorporation and Bylaws as currently in effect.
(b) Each of Parent, GP and Acquisition is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a Parent Material Adverse Effect. The term "Parent Material Adverse Effect"
means any change or effect that is (i) materially adverse to the business,
results of operations, condition (financial or otherwise) or prospects of Parent
and its subsidiaries, taken as a whole, other than any change or effect arising
out of general economic conditions or (ii) that may impair the ability of
Parent, GP and/or Acquisition to consummate the transactions contemplated
hereby.
SECTION 4.2. Authority Relative to this Agreement. Each of Parent, GP and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and the partners of GP and by GP
as the sole stockholder of Acquisition and no other corporate proceedings on the
part of Parent, GP or Acquisition are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent, GP and Acquisition and
constitutes a valid, legal and binding agreement of each of Parent, GP and
Acquisition enforceable against each of Parent, GP and Acquisition in accordance
with its terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and except as the
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availability of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity).
SECTION 4.3. Information Supplied. Neither the Schedule 14D-1, nor any of
the information supplied or to be supplied by Parent, GP or Acquisition for
inclusion or incorporation by reference in any of the other Disclosure
Statements will, at the respective times that the Proxy Statement (if necessary)
and the Schedule 14D-9 and any amendments thereof or supplements thereto are
filed with the SEC and are first published or sent or given to holders of
Shares, and in the case of any required Proxy Statement, at the time that it or
any amendment thereof or supplement thereto is mailed to the Company's
stockholders or, at the time of the Stockholders' Meeting, if such is required,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.4. Financing. Parent has or has available to it, and will make
available to Acquisition, all funds necessary to satisfy all of Parent's and
Acquisition's obligations under this Agreement and in connection with the
transactions contemplated hereby including without limitation, sufficient funds
available to purchase all of the Shares that Parent agrees, subject to the terms
and conditions hereof, to purchase hereunder and to pay all related fees and
expenses.
SECTION 4.5. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, Blue Sky
Laws, the HSR Act and the securities or antitrust laws of any country other than
the United States, and the filing and acceptance for record of the Merger
Certificate as required by the DGCL, respectively, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by Parent, GP or Acquisition of this
Agreement or the consummation by Parent, GP or Acquisition of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Parent Material Adverse Effect. Neither the execution,
delivery and performance of this Agreement by Parent, GP or Acquisition nor the
consummation by Parent, GP or Acquisition of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or Bylaws (or similar governing
documents) of Parent or Acquisition or the partnership agreement of GP, (ii)
result in a violation or breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or Lien) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent, GP or
Acquisition or any of Parent's other subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound or (iii)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent, GP or Acquisition or any of Parent's other subsidiaries or
any of their respective properties or assets except, in the case of (ii) or
(iii), for violations, breaches or defaults which would not have a Parent
Material Adverse Effect.
ARTICLE 5
COVENANTS
SECTION 5.1. Interim Operations. From the date of this Agreement until the
Closing Time, except as set forth in Section 5.1 of the Company Disclosure
Schedule or as expressly contemplated by any other provision of this Agreement,
unless the Parent has consented in writing thereto, the Company shall, and shall
cause each of its subsidiaries to:
(a) conduct its business and operations only in the ordinary course of
business consistent with past practice;
(b) use reasonable efforts to preserve intact the business,
organization, goodwill, rights, licenses, permits and franchises of the
Company and its subsidiaries and maintain their existing relationships with
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customers, suppliers and other persons having business dealings with them,
the loss of any of which would be reasonably likely to result in a Material
Adverse Effect on the Company;
(c) use reasonable efforts to keep in full force and effect adequate
insurance coverage and maintain and keep its properties and assets in good
repair, working order and condition, normal wear and tear excepted;
(d) not amend or modify its respective charter or certificate of
incorporation, by-laws, or other charter or organization documents;
(e) not authorize for issuance, issue, sell, grant, deliver, pledge or
encumber or agree or commit to issue, sell, grant, deliver, pledge or
encumber any shares of any class or series of capital stock of the Company
or any of its subsidiaries or any other equity or voting security or equity
or voting interest in the Company or any of its subsidiaries, any
securities convertible into or exercisable or exchangeable for any such
shares, securities or interests, or any options, warrants, calls,
commitments, subscriptions or rights to purchase or acquire any such
shares, securities or interests (other than issuances of Shares upon
exercise of Company Stock Options granted prior to the date of this
Agreement and disclosed pursuant to Section 3.2 to directors, officers,
employees and consultants of the Company in accordance with the Company
Option Plans as currently in effect);
(f) not (i) split, combine or reclassify any shares of its stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of its stock, (ii)
in solely the case of the Company, declare, set aside or pay any dividends
on, or make other distributions in respect of, any of the Company's stock,
or (iii) repurchase, redeem or otherwise acquire, or agree or commit to
repurchase, redeem or otherwise acquire, any shares of stock or other
equity or debt securities or equity interests of the Company or any of its
subsidiaries;
(g) not amend or otherwise modify the terms of any Company Stock
Options or the Company Option Plans, the effect of which shall be to make
such terms more favorable to the holders thereof or persons eligible for
participation therein;
(h) other than regularly scheduled seniority increases in the ordinary
course of business consistent with past practice, not increase the
compensation payable or to become payable to any directors, officers or
employees of the Company or any of its subsidiaries, or grant any severance
or termination pay to, or enter into any employment or severance agreement
with any director or officer of the Company or any of its subsidiaries, or
establish, adopt, enter into or amend in any material respect or take
action to accelerate any material rights or benefits under any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee of the
Company of any of its subsidiaries;
(i) not acquire or agree to acquire (including, without limitation, by
merger, consolidation, or acquisition of stock, equity securities or
interests, or assets) any corporation, partnership, joint venture,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets of any other person outside the
ordinary course of business consistent with past practice or any interest
in any real properties (whether or not in the ordinary course of business);
(j) not incur, assume or guarantee any indebtedness for borrowed money
(including draw-downs on letters or lines of credit) or issue or sell any
notes, bonds, debentures, debt instruments, evidences of indebtedness or
other debt securities of the Company or any of its subsidiaries or any
options, warrants or rights to purchase or acquire any of the same, except
for (i) renewals of existing bonds and letters of credit in the ordinary
course of business not to exceed $1,000,000 in the aggregate; and (ii)
advances, loans or other indebtedness in the ordinary course of business
consistent with past practice in an aggregate amount not to exceed
$1,000,000;
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(k) not sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any
material properties or assets of the Company and its subsidiaries taken as
a whole;
(l) not authorize or make any capital expenditures (including by
lease) in excess of $1,000,000 in the aggregate for the Company and all of
its subsidiaries;
(m) not make any material change in any of its accounting or financial
reporting (including tax accounting and reporting) methods, principles or
practices, except as may be required by GAAP or applicable tax laws;
(n) not make any material tax election or settle or compromise any
material United States or foreign tax liability;
(o) except in the ordinary course of business consistent with past
practice, not amend, modify or terminate any Contract required to be listed
in Section 3.15 of the Company Disclosure Schedule or waive, release or
assign any material rights or claims thereunder;
(p) not adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries; and
(q) except as to subsections (a), (b) and (c) of this Section 5.1, not
agree or commit in writing or otherwise to do any of the foregoing.
SECTION 5.2. Stockholders' Meeting.
(a) The Company, acting through the Board, shall, if required for the
Merger under the DGCL:
(i) duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders' Meeting"), to be held as soon as
practicable after the Tender Offer Purchase Time for the purpose of
considering and taking action upon this Agreement;
(ii) except as otherwise permitted under Section 5.3, include in the
Proxy Statement (A) the recommendation of the Board that stockholders of
the Company vote in favor of the approval and adoption of this Agreement,
the Merger and the other transactions contemplated hereby, and (B) a
statement that the Board believes that the consideration to be received by
the stockholders of the Company pursuant to the Merger is fair to such
stockholders;
(iii) except as otherwise permitted under Section 5.3, use reasonable
efforts (A) to obtain and furnish the information required to be included
by it in the Disclosure Statements and, after consultation with Parent and
providing Parent with a reasonable opportunity to review and comment upon
the Proxy Statement, cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time following the Tender Offer
Purchase Time, and (B) to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby. At
such meeting, Parent, GP and Acquisition will, and will cause their
affiliates to, vote all Shares owned by them in favor of approval and
adoption of this Agreement, the Merger and the transactions contemplated
hereby.
SECTION 5.3. Other Potential Acquirers.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to its terms, the
Company and its subsidiaries shall not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, (i) solicit or encourage submission
of, any inquiries, proposals or offers by any person, entity or group (other
than Parent and its affiliates, agents and representatives), or (ii) participate
in any discussions or negotiations with, or disclose any non-public information
concerning the Company or any of its subsidiaries to, or afford any access to
the properties, books or records of the Company or any of its subsidiaries to,
or otherwise assist or facilitate, or enter into or resolve to enter into any
agreement or understanding with, any person, entity or group (other than Parent
and its affiliates, agents and representatives), in connection with any
Acquisition Proposal with respect to the Company. For the purposes of this
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Agreement, an "Acquisition Proposal" with respect to an entity means any
proposal or offer relating to (i) any merger, consolidation, sale of substantial
assets or similar transactions involving the entity or any subsidiaries of the
entity (other than sales of assets or inventory in the ordinary course of
business or as permitted under the terms of this Agreement), (ii) the
acquisition by any person of beneficial ownership or a right to acquire
beneficial ownership of, or the formation of any "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder)
which beneficially owns, or has the right to acquire beneficial ownership of,
10% or more of the then outstanding shares of capital stock of the entity
(except for acquisitions for passive investment purposes only in circumstances
where the person or group qualifies for and files a Schedule 13G with respect
thereto); (iii) the adoption by the entity of a plan of liquidation or the
declaration or payment of an extraordinary dividend; (iv) the repurchase by the
entity of more than 20% of its outstanding shares of voting stock; (v) the
acquisition by the entity of direct or indirect ownership of a business where
annual revenue, net income or assets is greater than 20% of the entity; or (vi)
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. The Company will,
and will cause its subsidiaries and their respective directors, officers,
employees, representatives and agents, to immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. The Company will (i) notify Parent as
promptly as practicable if any inquiry or proposal is made or any information or
access is requested in connection with an Acquisition Proposal or potential
Acquisition Proposal and (ii) as promptly as practicable notify Parent of the
terms and conditions of any such Acquisition Proposal. In addition, subject to
the other provisions of this Section 5.3(a), from and after the date of this
Agreement until the earlier of the Effective Time and termination of this
Agreement pursuant to its terms, the Company and its subsidiaries will not, and
will instruct their respective directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly, make
or authorize any public statement, recommendation or solicitation in support of
any Acquisition Proposal made by any person, entity or group (other than Parent
or Acquisition); provided, however, that nothing herein shall prohibit the
Company's Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act.
(b) Except as allowed under Section 5.3(b), the Board will not withdraw or
modify in a manner adverse to Parent or Acquisition its recommendation of the
transactions contemplated hereby or approve or recommend any Acquisition
Proposal. Notwithstanding the provisions of paragraph (a) above, prior to
consummation of the Offer, the Company may, to the extent the Board of Directors
of the Company determines, in good faith, after consultation with outside legal
counsel, that the Board's fiduciary duties under applicable law require it to do
so, participate in discussions or negotiations with, and, subject to the
requirements of paragraph (c), below, furnish information to any person, entity
or group after such person, entity or group has delivered to the Company in
writing, an unsolicited bona fide Acquisition Proposal which the Board of
Directors of the Company in its good faith reasonable judgment determines, after
consultation with its independent financial advisors, would result in a
transaction more favorable than the Offer and the Merger to the stockholders of
the Company from a financial point of view and for which financing, to the
extent required, is then committed or which, in the good faith reasonable
judgement of the Board of Directors of the Company (based upon the advice of
independent financial advisors) is reasonably capable of being financed by such
person, entity or group and which is likely to be consummated (a "Superior
Proposal"). In the event the Company receives a Superior Proposal nothing
contained in this Agreement (but subject to the terms hereof) will prevent the
Board of Directors of the Company from recommending such Superior Proposal to
the Company's stockholders, if the Board determines, in good faith, after
consultation with outside legal counsel, that such action is required by its
fiduciary duties under applicable law, provided, however, that the Company shall
not recommend to its stockholders a Superior Proposal for a period of not less
than 72 hours after Parent's receipt of a copy of such Superior Proposal (or a
description of the terms and conditions thereof, if not in writing).
(c) Notwithstanding anything to the contrary herein, the Company will not
provide any nonpublic information to a third party unless: (x) the Company
provides such nonpublic information pursuant to a nondisclosure agreement with
terms regarding the protection of confidential information at least as
restrictive
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as such terms in the Confidentiality Agreement (as defined below); and (y) such
nonpublic information has been previously delivered to Parent.
SECTION 5.4. [INTENTIONALLY OMITTED].
SECTION 5.5. Access to Information. From the date of this Agreement until
the Closing Time, upon reasonable prior notice, the Company shall (and shall
cause each of its subsidiaries to) give the Parent and its representatives
(including lenders to and financing sources for such party) full access to the
officers, employees, agents, books, records, contracts, commitments, properties,
offices and other facilities of it and its subsidiaries, and shall furnish
promptly to the Parent and its representatives such financial and operating data
and other information concerning the business, operations, properties,
contracts, records and personnel of the Company and its subsidiaries as the
Parent may from time to time reasonably request. Parent and Acquisition will
make all reasonable efforts to minimize any disruption to the businesses of the
Company and its subsidiaries which may result from the access to properties and
employees and for data and information hereunder. All information obtained by
the Parent pursuant to this Section 5.5 shall be kept confidential in accordance
with the confidentiality provisions of the Non-Disclosure Agreement between
Parent and the Company dated May 17, 1999 (the "Confidentiality Agreement"). No
representations and warranties or conditions to the consummation of the Merger
contained herein or in any certificate or instrument delivered in connection
herewith shall be deemed waived or otherwise affected by any investigation made
by the parties or their respective representatives.
SECTION 5.6. Further Actions.
(a) Each of the parties hereto shall use its best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations, and consult and fully
cooperate with and provide reasonable assistance to each other party hereto and
their respective representatives in order, to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable
hereafter, including, without limitation, (i) using reasonable efforts to make
all filings, applications, notifications, reports, submissions and registrations
with, and to obtain all consents, approvals, authorizations or permits of,
Governmental Entities or other persons or entities as are necessary for the
consummation of the Merger and the other transactions contemplated hereby
(including, without limitation, pursuant to the HSR Act, the Securities Act, the
Exchange Act, Blue Sky Laws, Delaware law and other applicable laws and
regulations in effect in the United States, Belgium or any other jurisdiction),
and (ii) taking such actions and doing such things as any other party hereto may
reasonably request in order to cause any of the conditions to such other party's
obligation to consummate the Merger as specified in Article 8 of this Agreement
to be fully satisfied. Prior to making any application to or filing with any
Governmental Entity or other person or entity in connection with this Agreement,
the Company, on the one hand, and the Parent, on the other hand, shall provide
the other with drafts thereof and afford the other a reasonable opportunity to
comment on such drafts.
(b) Without limiting the generality of the foregoing, each of the Parent
and the Company agree to cooperate and use reasonable efforts to vigorously
contest and resist any action, suit, proceeding or claim, and to have vacated,
lifted, reversed or overturned any injunction, order, judgment or decree
(whether temporary, preliminary or permanent), that delays, prevents or
otherwise restricts the consummation of the Merger or any other transaction
contemplated by this Agreement, and to take any and all actions (including,
without limitation, the disposition of assets, divestiture of businesses, or the
withdrawal from doing business in particular jurisdictions) as may be required
by Governmental Entities as a condition to the granting of any such necessary
approvals or as may be required to avoid, vacate, lift, reverse or overturn any
injunction, order, judgment, decree or regulatory action; provided, however,
that in no event shall any party hereto take, or be required to take, any action
that could reasonably be expected to have a Material Adverse Effect on the
Company or that individually or in the aggregate could reasonably be expected to
have a Parent Material Effect.
SECTION 5.7. HSR Matters. Each party hereto shall make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act with respect to
the transactions contemplated hereby as promptly as practicable after the date
hereof. Each such filing shall request early termination of the waiting periods
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imposed by the HSR Act. Each party hereby agrees to use its reasonable best
efforts to cause a termination of the waiting period under the HSR Act without
the entry by a court of competent jurisdiction of an order enjoining the
consummation of the transactions contemplated hereby at as early a date as
possible. Each party also agrees to respond promptly to all investigatory
requests as may be made by the government. In the event that a Request for
Additional Information is issued under the HSR Act, each party agrees to furnish
all information required and to comply substantially with such request as soon
as is practicable after its receipt thereof so that any additional applicable
waiting period under the HSR Act may commence. Each party will keep the other
party apprised of the status of any inquiries made of such party by the
Department of Justice, Federal Trade Commission or any other governmental agency
or authority or members of their respective staffs with respect to this
Agreement or the transactions contemplated hereby.
SECTION 5.8. Public Announcements. Parent, Acquisition and the Company, as
the case may be, will consult with one another before issuing any press release
or otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Merger, and
shall not issue any such press release or make any such public statement prior
to such consultation except to the extent that such consultation may be
prohibited by applicable law or such a disclosure or release is required by
obligations pursuant to any listing agreement with the Brussels Stock Exchange
or Nasdaq as determined by Parent or the Company, as the case may be.
SECTION 5.9. Employee Benefit Matters; Company Stock Options. The Company
shall, or shall cause one of its subsidiaries to, take such action effective as
of the Effective Time with respect to any Company Employee Plan as Parent shall
reasonably request, including termination of any such plan. The Company shall
(a) cooperate with Parent and Acquisition in obtaining waivers, in form and
substance reasonably satisfactory to Parent and Acquisition, of all terms of the
Company Option Plans and all terms of outstanding Company Stock Options, which
terms could prevent, restrict or impair the ability of Parent, Acquisition and
the Company to effectuate fully the provisions of Section 2.10, and (b) use
reasonable efforts to cause its Compensation Committee to interpret the Company
Option Plan, to the extent possible, so as to enable the Company, Parent and
Acquisition to effectuate fully the provisions of Section 2.10.
SECTION 5.10. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which would be likely to cause (A) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time or (B) any covenant, condition or agreement contained in
this Agreement not to be complied with or satisfied in all material respects and
(ii) any material failure of the Company, Parent, GP or Acquisition, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.10 shall not cure such breach or
non-compliance or limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 5.11. Guarantee of Performance. Parent hereby guarantees the
performance by Acquisition and GP of their obligations under this Agreement.
SECTION 5.12 Indemnification; Directors' and Officers' Insurance.
(a) Parent and Acquisition agree that all rights to indemnification for
acts or omissions occurring prior to the Effective Time now existing in favor of
the current or former directors or officers (the "Indemnified Parties") of the
Company and its subsidiaries as provided in their respective certificates of
incorporation or bylaws (or similar organizational documents) or existing
indemnification contracts shall survive the Merger and shall continue in full
force and effect in accordance with their terms.
(b) For six years from the Effective Time, Parent shall maintain in effect
the Company's current directors' and officers' liability insurance or insurance
policies with substantially equivalent coverage covering those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy (a copy of which has been heretofore delivered to Parent).
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(c) This Section 5.12 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Acquisition and
the Indemnified Parties, and shall be binding on all successors and assigns of
Parent and the Acquisition.
SECTION 5.13 State Takeover Laws. Notwithstanding any other provision of
this Agreement, in no event shall the Section 203 Approval be withdrawn, revoked
or modified by the Board. If any state takeover statute other than Section 203
of the DGCL becomes or is deemed to become applicable to the Offer, the
acquisition of the Shares pursuant to the Offer or the Stockholders Agreement or
the Merger, the Company shall take all action necessary to render such statute
inapplicable to all of the foregoing.
SECTION 5.14 Employee Benefits. Following the Effective Time, the Surviving
Corporation will provide the persons employed by the Company immediately prior
to the Effective Time, for so long as such persons remain employed by the
Surviving Corporation with benefits (other than stock options) in the aggregate
which are substantially comparable to those provided to such persons by the
Company immediately prior to the Effective Time.
ARTICLE 6
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 6.1 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, in the event that dissenters' rights are available in
connection with the Merger pursuant to Section 262 of the DGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and that are held
by stockholders who did not vote in favor of the Merger and who comply with all
of the relevant provisions of Section 262 of the DGCL (the "Dissenting Shares")
shall not be converted into or be exchangeable for the right to receive the Cash
Merger Consideration, but instead shall be converted into the right to receive
such consideration as may be determined to be due to such stockholders pursuant
to Section 262 of the DGCL, unless and until such holders shall have failed to
perfect or shall have effectively withdrawn or lost their rights to appraisal
under the DGCL. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right, such holder's Shares shall thereupon
be deemed to have been converted into and to have become exchangeable for the
right to receive, as of the Effective Time, the Cash Merger Consideration
without any interest thereon. The Company shall give Parent (i) prompt notice of
any written demands for appraisal of Shares received by the Company and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
any such demands. The Company shall not, without the prior written consent of
Parent, voluntarily make any payment with respect to, or settle or offer to
settle, any such demands.
ARTICLE 7
CONDITIONS TO THE OFFER
SECTION 7.1. Conditions to the Offer. (a) Notwithstanding any other
provisions of the Offer, Acquisition shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) under the Exchange Act (relating to Acquisition's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restrictions referred to above, the payment for, any tendered Shares, and may
amend the Offer consistent with the terms of this Agreement, including extending
the deadline for tendering Shares, or terminate the Offer, if any of the
following events shall occur:
(i) from the date of this Agreement until the Tender Offer Purchase
Time, there shall have occurred any change, event, occurrence or
circumstance which, individually or in the aggregate, has a Material Change
(as defined below) on the Company (except for changes, events, occurrences
or circumstances with respect to general economic conditions). "Material
Change" means any change or effect that is materially adverse to the
business, properties or financial condition of the Company; provided,
however, that (x) the commencement of any litigation against the Company or
its subsidiaries
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after the date of this Agreement which is related to this Agreement or the
transactions contemplated hereby or any adverse change, event or effect
that is proximately caused by such litigation that is initiated or
threatened after the date of this Agreement against the Company or any of
its subsidiaries and (y) any adverse change resulting from any action taken
by the Company that was approved by Parent under Section 5.1 of this
Agreement shall not be a Material Change; and provided further, however,
that if the Offer is consummated after July 31, 1999 the following shall
not be taken into account in determining whether there has been or would be
a Material Change with respect to the Company to the extent such events
occur subsequent to July 31, 1999:
(a) a reduction of up to 25% of the (i) average monthly
consolidated revenue and net profit of the Company compared to the
average monthly consolidated revenue and net profit of the Company
during the 12 months immediately preceding the date of this Agreement or
(ii) the net worth of the Company compared to the December 31, 1998
balance sheet;
(b) any change in the assets of the Company in connection with
obtaining required regulatory approvals; or
(c) any voluntary termination after the date of this Agreement of
officers or other key employees of the Company;
(ii) from the date of this Agreement until the Tender Offer Purchase
Time, any Governmental Entity or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (and if
temporary or preliminary, not vacated within five (5) business days of its
entry), except with regard to HSR Act approval which shall be governed by
Section 7.1(a)(vii), which is in effect at the Tender Offer Purchase Time
and which (1) makes the acceptance for payment of, or the payment for, some
or all of the Shares illegal or otherwise prohibits or restricts
consummation of the Offer, the Merger or any of the other transactions
contemplated hereby, (2) imposes material limitations on the ability of
Parent, GP or Acquisition to acquire or hold or to exercise any rights of
ownership of the Shares, or effectively to manage or control the Company
and its business, assets and properties or (3) would result in a Material
Change to the Company; provided, however, that the parties shall use
reasonable efforts (subject to the proviso in Section 5.6(b)) to cause any
such decree, judgment or other order to be vacated or lifted as soon as is
practicable;
(iii) the representations and warranties of the Company set forth in
this Agreement shall not (A) have been true and correct in one or more
material respects on the date hereof or (B) (except with respect to the
representations and warranties set forth in Sections 3.8, 3.9, 3.14, 3.15,
3.22, 3.13(c), (d), (e), (f), (g) and (h) and 3.16(a), (b)(i), (ii), (iv),
(v) and (vi)) be true and correct in one or more material respects as of
the scheduled expiration date (as such date may be extended) of the Offer
as though made on and as of such date or the Company shall have breached or
failed in any respect to perform or comply with any material obligation,
agreement or covenant required by this Agreement to be performed or
complied with by it (including without limitation the provisions of Section
5.3) except, in each case with respect to clause B, (1) for changes
specifically permitted by the Agreement and (2)(x) for those
representations and warranties that address matters only as of a particular
date which are true and correct as of such date or (y) where the failure of
representations and warranties (without regard to materiality
qualifications therein contained) to be true and correct, or the
performance or compliance with such obligations, agreements, or covenants,
would not, individually or in the aggregate, result in a Material Change to
the Company;
(iv) from the date of this Agreement until the Tender Offer Purchase
Time, this Agreement shall have been terminated in accordance with its
terms;
(v) from the date of this Agreement until the Tender Offer Purchase
Time the Board of Directors of the Company or any committee thereof shall
have (1) withdrawn or modified (including without limitation, by amendment
of the Company's Schedule 14D-9) in a manner adverse to Parent or
Acquisition its approval or recommendation of the Offer, the Merger or the
Agreement, (2) approved or
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recommended any Acquisition Proposal by a third party other than the Offer
and the Merger, (3) resolved to do any of the foregoing, or (4) upon a
request to reaffirm the Company's approval or recommendation of the Offer,
the Agreement or the Merger, the Board of Directors of the Company shall
fail to do so within two business days after such request is made;
(vi) from the date of this Agreement until the Tender Offer Purchase
Time, any of the consents, approvals, authorizations, orders or permits
required to be obtained by the Company, Parent, GP or Acquisition, or their
respective subsidiaries in connection with the Offer or the Merger from, or
filings or registrations required to be made by any of the same prior to
the Tender Offer Purchase Time with, any Governmental Entity in connection
with the execution, delivery and performance of this Agreement (including
without limitation the termination or expiration of any applicable waiting
period or the receipt of any required clearance under the HSR Act) shall
not have been obtained or made or shall have been obtained or made subject
to conditions or requirements, which (A) make the acceptance for payment
of, or the payment for the Shares illegal or otherwise prohibits or
restricts the consummation of the Offer or the Merger or (B) have a Parent
Material Adverse Effect or result in a Material Change to the Company or
(C) impose material limitations on the ability of Parent, GP or Acquisition
effectively to manage or control the Company;
(vii) from the date of this Agreement until the Tender Offer Purchase
Time, in the case of HSR Act approval, any Governmental Entity or court of
competent jurisdiction shall have entered a final, non-appealable order
enjoining the consummation of the Merger;
(viii) from the date of this Agreement until the Tender Offer Purchase
Time, there shall have occurred (A) the declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States or
in Belgium or (B) the commencement of a war or armed hostilities involving
the United States or Belgium and resulting in a Material Change to the
Company or having a Parent Material Adverse Effect or materially adversely
affecting (or materially delaying) the consummation of the Offer.
(b) The conditions set forth in Section 7.1(a) are for the sole benefit of
Parent, GP and Acquisition and may be asserted by Parent regardless of any
circumstances giving rise to any condition and may be waived by Parent, in whole
or in part, at any time and from time to time, in the sole discretion of Parent.
The failure by Parent (or any affiliate of Parent) at any time to exercise any
of the foregoing rights will not be deemed a waiver of any right and each right
will be deemed an ongoing right which may be asserted at any time and from time
to time.
(c) Notwithstanding the foregoing, if within the "Cure Time" (defined
below) the Company has cured one or more conditions set forth in subsections
(a)(i), (ii), or (iii) of Section 7.1, and following such cure, no condition
enumerated in Section 7.1(a) continues to exist, then this Article shall not
relieve Parent, GP and Acquisition of their obligations hereunder with respect
to the Offer. For purposes hereof, "Cure Time" means the earlier of (A) two (2)
full business days before the scheduled expiration date of the Offer (as such
period may be extended) or (B) ten (10) full business days following notice to
the Company of the existence of such condition.
ARTICLE 8
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction at or prior to the Closing Time of the following
conditions:
(a) this Agreement, the Merger and the other transactions contemplated
hereby shall have been approved by all necessary corporate action of the
Company, including, if necessary, adoption by vote of the stockholders of
the Company;
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(a) no Governmental Entity or court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (and if
temporary or preliminary, not vacated within five business days of its
entry) which is in effect and which (1) makes the payment of the Cash
Merger Consideration illegal or otherwise prohibits or restricts
consummation of the Merger or any of the other applicable transactions
contemplated hereby, or (2) imposes material limitations on the ability of
Parent, GP or Acquisition to acquire or hold or to exercise any rights of
ownership of the Surviving Corporation, or effectively to manage or control
the Surviving Corporation and its business, assets and properties;
(b) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received; and
(c) Acquisition shall have purchased Shares pursuant to the Offer.
ARTICLE 9
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1. Termination. This Agreement may be terminated, at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual written agreement of the Boards of Directors of Parent
and the Company;
(b) by either Parent or the Company;
(i) if the Offer (as may be extended in accordance with the terms
hereof) shall be terminated or expire without any Shares having been
purchased pursuant to the Offer; provided, however, that a party shall
not be entitled to terminate this Agreement pursuant to this Section
9.l(b)(i) if it is in material breach of its representations and
warranties, covenants or other obligations under this Agreement; and
provided, further, however, that if the Offer is not consummated due to
a failure to obtain clearance under the HSR Act, Parent may not
terminate this Agreement until December 31, 1999 and the Company may not
terminate this Agreement until April 1, 2000; or
(ii) if any court of competent jurisdiction in the United States or
other United States governmental body shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(c) by Parent:
(i) if the Board of Directors of the Company or any committee
thereof shall have approved, or recommended that stockholders of the
Company accept or approve, an Acquisition Proposal by a third party, or
shall have resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified its approval of, or
recommendation that the stockholders of the Company accept or approve
(as the case may be), the Offer, this Agreement and the Merger, or shall
have resolved to do any of the foregoing;
(iii) if the Company shall have failed to include in the Schedule
14D-9 the recommendation of the Board of Directors of the Company that
the stockholders of the Company accept the Offer;
(iv) prior to the purchase of the Shares pursuant to the Offer, if
the Company is in material breach of any of its covenants or obligations
under this Agreement, or any representation or warranty of the Company
contained in this Agreement shall have been incorrect, in any material
respect, when made;
(v) prior to the purchase of Shares pursuant to the Offer, in the
event that the conditions to the Offer set forth in Section 7.1 shall
not be satisfied, provided, that Parent may not terminate this Agreement
due to a failure to obtain clearance under the HSR Act until December
31, 1999; or
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<PAGE> 32
(vi) after purchase of the Shares pursuant to the Offer, if the
Company is in violation or breach of Section 1.3.
(d) by the Company:
(i) if the Offer shall not have been commenced in accordance with
Section 1.1, or Parent or Acquisition shall have failed to purchase
validly tendered Shares in violation of the terms of the Offer within
ten business days after the expiration of the Offer; provided, however,
that the Company shall not be entitled to terminate this Agreement
pursuant to this Section 9.1(d)(i) if it is in material breach of its
representations and warranties, covenants or other obligations under
this Agreement;
(ii) if the Board of Directors of the Company has resolved to, and
in fact does, recommend to the Company's Stockholders that they accept a
Superior Proposal, provided that all the provisions of Section 5.3 have
been fully complied with and the Break-up Fee has been paid to Parent in
accordance with Section 9.3(b);
(iii) prior to the purchase of Shares pursuant to the Offer, if
Parent or Acquisition is in material breach of any of its covenants or
obligations under this Agreement, or any representation or warranty of
Parent or Purchaser contained in this Agreement shall have been
incorrect, in any material respect, when made; or
(iv) at any time after March 31, 2000 if the Offer has not been
consummated due to a failure to obtain clearance under the HSR Act;
provided, however, that the Company shall not be entitled to terminate
this Agreement pursuant to this Section 9.1(d)(iv) if it is in material
breach of its representations and warranties, covenants or other
obligations under this Agreement.
SECTION 9.2. Procedure and Effect of Termination. In the event of the
termination of this Agreement by the Company or Parent or both of them pursuant
to Section 9.1, the terminating party shall provide written notice of such
termination to the other party and this Agreement shall forthwith become void
and there shall be no liability on the part of Parent, Purchaser or the Company,
except that the confidentiality provisions of Section 5.5, the first sentence of
Section 5.13, and Sections 9.2 and 9.3 shall survive the termination of this
Agreement. The foregoing shall not relieve any party for liability for damages
actually incurred as a result of any breach of this Agreement.
SECTION 9.3. Fees and Expenses.
(a) Except as otherwise provided in this Agreement and whether or not the
transactions contemplated by the Offer and this Agreement are consummated, all
costs and expenses incurred in connection with the transactions contemplated by
the Offer and this Agreement shall be paid by the party incurring such expenses.
(b) The Company shall pay to Parent, an amount equal to $7,500,000 (the
"Break-Up Fee"), if any of the following shall occur:
(i) if the Board of Directors of the Company or any committee thereof
shall have approved, or recommended that stockholders of the Company accept
or approve, an Acquisition Proposal by a third party, or shall have
resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation that
the stockholders of the Company accept or approve (as the case may be), the
Offer, this Agreement and the Merger, or shall have resolved to do any of
the foregoing; or
(iii) if the Company shall have failed to include in the Schedule
14D-9 the recommendation of the Board of Directors of the Company that the
stockholders of the Company accept the Offer.
Such Break-up Fee shall be payable within 30 days of such event.
(b) Parent shall pay to the Company the sum of $8,000,000 if the Offer has
not been consummated, and (i) Parent terminates this Agreement during the period
from December 31, 1999 through February 15, 2000
27
<PAGE> 33
due to a failure to obtain clearance under the HSR Act and (ii) Parent shall
have refused to consent to any divestiture by the Company required for clearance
under the HSR Act.
(c) Parent shall pay to the Company the sum of $15,000,000 if the Offer has
not been consummated, and (i) Parent terminates the Agreement at any time after
February 15, 2000 due to a failure to obtain clearance under the HSR Act and
(ii) Parent shall have refused to consent to any divestiture by the Company
required for clearance under the HSR Act.
(d) Parent shall pay to the Company the sum of $15,000,000 if the Company
terminates the Agreement pursuant to Section 9.1(d)(iv) and Parent shall have
refused to consent to any divestiture by the Company required for clearance
under the HSR Act.
SECTION 9.4. Amendment. This Agreement may be amended by each of the
parties by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that (i) such
amendment shall be in writing signed by all of the parties, (ii) any such
waiver, amendment or supplement by the Company shall be effective as against the
Company only if approved by a majority of the Continuing Directors and (iii)
after adoption of this Agreement and the Merger by the stockholders of the
Company, no amendment may be made without the further approval of the
stockholders of the Company which reduces the Merger Consideration or changes
the form thereof or changes any other terms and conditions of this Agreement if
the changes, alone or in the aggregate, would materially adversely affect the
stockholders of the Company.
SECTION 9.5. Waiver. At any time prior to the Effective Time, whether
before or after the Company's Stockholders Meeting, any party hereto, by action
taken by its Board of Directors, may (i) extend the time for the performance of
any of the obligations or other acts of any other party hereto or (ii) subject
to the provisions of Section 9.4, waive compliance with any of the agreements of
any other party or with any conditions to its own obligations. Any agreement on
the part of a party hereto 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 of such party. Notwithstanding the above, any waiver
given shall not apply to any subsequent failure of compliance with agreements of
the other party or conditions to its own obligations.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the Tender
Offer Purchase Time or a termination of this Agreement; provided, however, that
this Section 10.1 shall not limit any covenant or agreement of the parties
hereto which by its terms requires performance after the Tender Offer Purchase
Time including, without limitation, the covenants and agreements set forth in
Article 5.
SECTION 10.2. Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all other prior agreements and understandings both
written and oral between the parties with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise.
SECTION 10.3. Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
28
<PAGE> 34
SECTION 10.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
or by registered or certified mail (postage prepaid, return receipt requested)
to each other party as follows:
if to Parent, GP or
Acquisition: ION BEAM APPLICATIONS
S.A. Chemin du Cyclotron, 3
B-1348 Lourain-la-Neuve
Belgium
Telecopier: 011-32-10-47-5810
Attention: Pierre Mottet
with a copy to: Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10177
Telecopier: (212)
Attention: Ramon P. Marks, Esq.
Kevin T. Collins, Esq.
if to the Company to: STERIGENICS INTERNATIONAL, INC.
4020 Clipper Court
Fremont, California 94538
Telecopier:
Attention: James F. Clouser, President
and Chief Executive Officer
with a copy to: Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
Telecopier: (650) 321-2800
Attention: Carla S. Newell, Esq.
Jay K. Hachigian, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 10.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the principles of conflicts of law thereof. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of any state or federal court
within Delaware, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, other than issues involving the
corporate governance of any of the parties hereto, agrees that process may be
served upon them in any manner authorized by the laws of the State of Delaware
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
SECTION 10.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 10.7. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns and nothing in this Agreement express or implied is intended
to or shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
SECTION 10.8. Certain Definitions. For the purposes of this Agreement the
term:
(a) "affiliate" means a person that, directly or indirectly, through
one or more intermediaries controls, is controlled by or is under common
control with the first-mentioned person;
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<PAGE> 35
(b) "business day" means any day other than a day on which there is no
trading on Nasdaq;
(c) "stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(d) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity; and
(e) "subsidiary" or "subsidiaries" of the Company, Parent, the
Surviving Corporation or any other person means any corporation,
partnership, limited liability company, association, trust, unincorporated
association or other legal entity of which the Company, Parent, the
Surviving Corporation or any such other person, as the case may be, (either
alone or through or together with any other subsidiary) owns, directly or
indirectly, 50% or more of the capital stock the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
SECTION 10.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or any officer,
director, employee, agent, representative or investor of any party hereto.
SECTION 10.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; provided, however, that if a party
hereto is entitled to receive the Termination Fee pursuant to Section 9.3 it
shall not also be entitled to specific performance to compel the consummation of
the Merger.
SECTION 10.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
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<PAGE> 36
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
ION BEAM APPLICATIONS S.A.
By: /s/ Pierre Mottet
--------------------------------------
Name: Pierre Mottet
Title: Chief Executive Officer
ION BEAM APPLICATIONS G.P.
ION BEAM APPLICATIONS S.A.
Its General Partner
By: /s/ Pierre Mottet
--------------------------------------
Name: Pierre Mottet
Title:
--------------------------------------
IBA ACQUISITION CORP.
By: /s/ Pierre Mottet
--------------------------------------
Name: Pierre Mottet
Title:
--------------------------------------
STERIGENICS INTERNATIONAL, INC.
By: /s/ James F. Clouser
--------------------------------------
Name: James F. Clouser
Title: Chief Executive Officer
31
<PAGE> 1
(c)(2)
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (the "Agreement") is dated as of June 10,
1999, by and among Ion Beam Applications s.a. ("Parent"), a corporation
organized under the laws of the Kingdom of Belgium, Ion Beam Applications G.P.
("GP"), a Delaware general partnership which is controlled by Parent, and IBA
Acquisition Corporation ("Acquisition"), a Delaware corporation which is
wholly-owned by GP, and the stockholders listed on Schedule I hereto (each, a
"Stockholder," and collectively, the "Stockholders") of SteriGenics
International, Inc. (the "Company"), a Delaware corporation. Capitalized terms
used and not defined herein have the respective meanings assigned to them in the
Merger Agreement (defined herein).
WHEREAS, concurrently herewith, Parent, GP, Acquisition and the Company are
entering into a Merger Agreement, the form of which is appended hereto as
Exhibit A (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"), pursuant to which the Offer will be made by Acquisition for
the issued and outstanding Shares of the Company, and Acquisition will be merged
with and into the Company (the "Merger");
WHEREAS, each Stockholder Beneficially Owns (defined herein) the number of
shares, par value $0.01 per share, of common stock (the "Common Stock") of the
Company (the "the Shares") set forth opposite each Stockholder's name on
Schedule I hereto;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Acquisition have required that each Stockholder agree, and
each of each Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereby agree as follows:
SECTION 1. Agreement to Vote; Irrevocable Proxy.
(a) Each Stockholder hereby agrees that during the period commencing as of
the date of this Agreement and continuing until the first to occur of the
Closing Time or 45 days after the termination of the Merger Agreement in
accordance with its terms, at any meeting of the holders of the Shares, however
called, or in connection with any written consent of the holders of Shares, each
Stockholder shall vote (or cause to be voted) the Shares held of record or
Beneficially Owned (as defined herein) by each Stockholder, whether owned on the
date hereof or hereafter acquired, (i) in favor of approval of the Merger
Agreement, all transactions contemplated thereby, and any actions required in
furtherance thereof and hereof (including election of such directors of the
Company as Parent is entitled to designate pursuant to the Merger Agreement);
(ii) against any action or agreement that is intended, or could reasonably be
expected, to impede, interfere with, or prevent the Offer or the Merger or
result in a breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Company or any of its subsidiaries
under the Merger Agreement or this Agreement; and (iii) except as specifically
requested in writing in advance by Parent , against the following actions (other
than the Merger and the transactions contemplated by the Merger Agreement and
this Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries or affiliates; (B) a sale, lease, transfer or disposition by the
Company or any of its subsidiaries of any assets outside the ordinary course of
business or any assets which in the aggregate are material to the Company and
its subsidiaries taken as a whole, or a reorganization, recapitalization,
dissolution or liquidation of the Company or any of its subsidiaries or
affiliates; (C)(1) any change in the present capitalization of the Company or
any amendment of the Company's charter or By-Laws; (2) any other material change
in the Company's or any of its subsidiaries' corporate structure or business; or
(3) any other action that, in the case of each of the matters referred to in
clauses (C)(1), (2) or (3), is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or materially adversely affect the
Offer, the Merger or the transactions contemplated by this Agreement or the
Merger Agreement. None of the Stockholders shall enter into any agreement or
<PAGE> 2
understanding with any Person (as defined herein) the effect of which would be
inconsistent with or violative of the provisions and agreements contained in
Section 1 or 2 hereof.
(b) By his execution hereof and in order to secure his obligations
hereunder, each Stockholder hereby grants to, and appoints Pierre Mottet and
Yves Jongen, in their respective capacities as officers of Parent, and any
individual who shall hereafter succeed to any such office of Parent, and any
other designee of Parent, and each of them individually, each Stockholder's true
and lawful irrevocable (until the earlier of the Closing Time or 45 days after
the termination of the Merger Agreement in accordance with its terms (the
"Termination Date")) proxy and attorney-in-fact (with full power of
substitution) to vote the Shares, or grant a consent or approval in respect of
such Shares, as indicated in Section 1(a) above; effective immediately upon the
execution of this Agreement. Each Stockholder intends this proxy to be
irrevocable (from the date of this Agreement until the Termination Date) and
coupled with an interest and will take such further action and execute such
other instruments as may be necessary to effectuate the intent of this proxy and
hereby represents that any proxy heretofore given in respect of his Shares is
not irrevocable, and hereby revokes any proxy previously granted by each
Stockholder with respect to the Shares. Each Stockholder understands and
acknowledges that Parent and Acquisition are entering into the Merger Agreement
in reliance on such Stockholder's execution and delivery of this irrevocable
proxy. Each Stockholder hereby affirms that this irrevocable proxy is given in
connection with the execution of this Agreement and the Merger Agreement, and
further affirms that this irrevocable proxy is coupled with an interest in this
Agreement for the term stated herein and may under no circumstances be revoked.
Each Stockholder hereby ratifies and confirms all that this irrevocable proxy
may lawfully do or cause to be done by virtue hereof. This proxy is executed and
intended to be irrevocable in accordance with the provisions of Section 212(e)
of the Delaware General Corporation Law. This proxy shall terminate
automatically on the Termination Date.
SECTION 2. Other Covenants, Representations and Warranties.
Each Stockholder hereby represents, warrants and covenants to Parent and
Acquisition as of the date hereof and as of the Closing Time as follows:
(a) Ownership of Shares. Each Stockholder is the record and Beneficial
Owner of the number of Shares set forth opposite each Stockholder's name on
Schedule I hereto. On the date hereof, the Shares set forth opposite each
Stockholder's name on Schedule I hereto constitute all of the Shares owned of
record or Beneficially Owned by each Stockholder. Each Stockholder owns such
Shares free and clear of all liens, claims, charges, security interests,
mortgages or other encumbrances, and such Shares are subject to no rights of
first refusal, put rights, other rights to purchase or encumber such Shares, or
to any agreements other than this Agreement as to the encumbrance or disposition
of such Shares. Such Shares are duly and validly issued, fully paid and
non-assessable. Each Stockholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Section 1 hereof, sole
power of disposition, sole power of conversion, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Shares set forth opposite
each Stockholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Each Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each Stockholder will not violate any other agreement to which
each Stockholder is a party including, without limitation, any voting agreement,
shareholder agreement or voting trust. This Agreement has been duly and validly
executed and delivered by each Stockholder and constitutes a valid and binding
agreement of each Stockholder, enforceable against each Stockholder in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and except as the
availability of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principles are
applied in a proceeding at law or in equity). There is no beneficiary or holder
of a voting trust certificate or other interest of any trust of which each
Stockholder is trustee who is not a party to this Agreement and whose consent is
required for the execution and delivery of this Agreement or the consummation by
each Stockholder of the transactions contemplated hereby. If any Stockholder is
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<PAGE> 3
married and such Stockholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and constitutes a
valid and binding agreement of, such Stockholder's spouse, enforceable against
such person in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equitable remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principles are applied in a proceeding at law or in equity).
(c) No Conflicts. (i) Except for filings, permits, authorizations, consents
and approvals as may be required under and other applicable requirements of the
HSR Act, no filing with, and no permit, authorization, consent or approval of,
any state or federal public body or authority is necessary for the execution of
this Agreement by each Stockholder and the consummation by each Stockholder of
the transactions contemplated hereby and (ii) none of the execution or delivery
of this Agreement by each Stockholder, the consummation by each Stockholder of
the transactions contemplated hereby or compliance by each Stockholder with any
of the provisions hereof shall (A) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or obligation of any
kind to which each Stockholder is a party or by which each Stockholder or any of
such Stockholder's properties or assets may be bound, or (B) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to each Stockholder or any of each Stockholder's properties or
assets. This Agreement supersedes all prior agreements to which each Stockholder
is a party with respect to such Stockholder's Shares.
(d) No Finder's Fees. No broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated by
the Merger Agreement based upon arrangements made by or on behalf of any
Stockholder.
(e) Other Potential Acquirers. Each Stockholder (i) shall immediately cease
any existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any acquisition of all or any material portion of the
assets of, or any equity interest in, the Company or any of its subsidiaries or
any business combination with the Company or any of its subsidiaries, in his or
her capacity as such, and (ii) from and after the date hereof until termination
of the Merger Agreement in accordance with its terms, shall not, in its or his
capacity as a stockholder of the Company, directly or indirectly, initiate,
solicit or knowingly encourage (including by way of furnishing non-public
information or assistance), or take any other action to facilitate knowingly,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any such transaction or acquisition, or agree to or
endorse any such transaction or acquisition, or authorize or permit any of each
Stockholder's agents to do so, and each Stockholder shall promptly notify Parent
of any proposal and shall provide a copy of any such written proposal and a
summary of any oral proposal to Parent immediately after receipt thereof (and
shall specify the material terms and conditions of such proposal and identify
the person making such proposal) and thereafter keep Parent advised of any
development with respect thereto.
(f) Tender of Shares; Restriction on Transfer, Proxies and
Non-Interference. Each of the Stockholders shall tender his or its Shares in the
Offer (as defined in the Merger Agreement) and shall not withdraw such Shares
therefrom unless and until the Merger Agreement is terminated in accordance with
its terms without such Shares being purchased by Acquisition pursuant to the
Offer. None of the Stockholders shall, directly or indirectly: (i) tender his or
its Shares in any other tender offer or exchange offer for the Shares; (ii)
except as contemplated by this Agreement or the Merger Agreement, otherwise
offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or all of
any such Stockholder's Shares or any interest therein; (iii) grant any proxies
or powers of attorney, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares; or (iv) take any action that would
make any representation or warranty of any such
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<PAGE> 4
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing such Stockholder's
obligations under this Agreement.
(g) Reliance by Parent and Acquisition. Each Stockholder understands and
acknowledges that Parent and Acquisition are relying upon the foregoing
representations, warranties and covenants by such Stockholder, and on each
Stockholder's execution and delivery of this Agreement in entering into the
Merger Agreement.
SECTION 3. Further Assurances; Merger Agreement Compliance.
From time to time, at Parent's request and without further consideration,
each Stockholder agrees to execute and deliver such additional documents and
take all such further lawful action as may be necessary or desirable to
consummate and make effective, and to cause the Company to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
SECTION 4. Stop Transfer; Form of Legend.
(a) Each Stockholder agrees with, and covenants to, Parent that each
Stockholder shall not request that the Company register the transfer (book-entry
or otherwise) of any certificate or uncertificated interest representing any of
each Stockholder's Shares, without the consent of the Parent. In the event of a
stock dividend or distribution, or any change in the Shares by reason of any
stock dividend, split-up, recapitalization, combination, exchange of shares or
the like, the term "Shares" shall be deemed to refer to and include the Shares
as well as all such stock dividends and distributions and any shares into which
or for which any or all of the Shares may be changed or exchanged.
(b) If reasonably requested by Parent, all certificates representing any of
each Stockholder's Shares shall contain the following legend:
"The securities represented by this certificate are subject to certain
restrictions on transfer and other terms of a Stockholders Agreement, dated
as of June 10, 1999, among Ion Beam Applications s.a., Ion Beam
Applications G.P., IBA Acquisition Corporation, and the parties listed on
the signatures pages thereto, a copy of which is on file in the principal
office of Ion Beam Applications s.a."
SECTION 5. The Options.
Each Stockholder hereby agrees as follows:
(a) Grant of Options. Subject to the terms of this Section 5, each
Stockholder hereby grants to Parent (or its designee), effective upon the
execution hereof, an irrevocable option (each, an "Option") to purchase all
Shares held of record or Beneficially Owned by each such Stockholder at a
purchase price per Share equal to the greater of $27 or such higher price as may
be offered by Acquisition in the Offer (the "Option Price").
(b) Exercise of Options. Parent may exercise the Options, in whole or in
part, at any time and from time to time, following the occurrence of a Purchase
Event (as defined below); provided that any Options not theretofore exercised
shall expire and be of no further force and effect upon the earliest to occur
(the "Expiration Date") of (i) the Closing Time; (ii) forty-five days after the
first occurrence of a Purchase Event; or (iii) forty-five days after the
termination of the Merger Agreement in accordance with Section 9.1(c)(i), (ii)
or (iii) of the Merger Agreement; provided, however, that in the case of clauses
(ii) and (iii) above, the Expiration Date shall be extended for a period not to
extend beyond March 31, 2000 in the event that clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
is required by Parent to acquire the Shares; provided, further that Parent is
using all reasonable efforts to obtain such clearance.
As used herein, a "Purchase Event" shall mean any of the following events
that occurs after the date hereof:
(i) Beneficial Ownership of more than 20% of the outstanding capital
stock of the Company (or rights to acquire such capital stock of the
Company) shall have been acquired by any Person or "group" other than
Parent, Acquisition, or any affiliate of any of them;
4
<PAGE> 5
(ii) the Company shall have entered into a definitive agreement or
approved or recommended any proposal which provides for the acquisition of
20% or more of the outstanding capital stock of the Company or
substantially all of the assets of the Company by any Person or group other
than Parent, Acquisition, or an affiliate of any of them;
(iii) (A) the failure of the Company's stockholders to approve the
Merger Agreement or the transactions contemplated thereby at a meeting
called to consider such Merger Agreement, if such meeting shall have been
preceded by (x) the public announcement by any Person or group (other than
Parent, Acquisition or an affiliate of any of them) of an offer or proposal
to acquire, merge or consolidate with the Company, or (y) the Board of
Directors of the Company's publicly withdrawing or modifying, or publicly
announcing its intent to withdraw or modify, its recommendation that the
stockholders of the Company approve the transactions contemplated by the
Merger Agreement or (B) the acceptance by the Company' Board of Directors
of, or the public recommendation by the Company' Board of Directors that
the stockholders of the Company accept, an offer or proposal from any
Person or group (other than Parent, Acquisition or an affiliate of any of
them), to acquire 20% or more of the outstanding capital stock of the
Company or for a merger or consolidation or any similar transaction
involving the Company;
(iv) the making of an Acquisition Proposal as described in Section 5.3
of the Merger Agreement which would entitle Parent or the Company to
terminate the Merger Agreement pursuant to Section 9.1 of the Merger
Agreement; or
(v) any breach by the Stockholder of this Agreement.
(c) Notice of Exercise. To exercise an Option, Parent shall, prior to the
Expiration Date, give written notice to each Stockholder specifying the location
in Palo Alto, California and time for the closing (the "Option Closing") of such
purchase. The Option Closing shall be held on the date that is no later than
three business days after the date on which each of the conditions set forth in
Section 5(d) below has been satisfied or waived by Parent.
(d) Conditions to Option Closing Following Exercise of Options. The
occurrence of the Option Closing shall be subject to the satisfaction of each of
the following conditions:
(i) to the extent necessary, any applicable waiting periods (and any
extension thereof) under the HSR Act with respect to the purchase of the
Shares following the exercise of an Option shall have expired or been
terminated; and
(ii) no preliminary or permanent injunction or other order, decree or
ruling issued by any court of governmental or regulatory authority,
domestic or foreign, of competent jurisdiction prohibiting the exercise of
an Option or the delivery of Shares shall be in effect.
The foregoing conditions may be waived solely by Parent, provided that no
Stockholder would incur any material liability as a result of such waiver.
(e) Transferability of Options. Parent may sell or transfer the Options and
any Shares acquired upon exercise of an Option at any time, without the written
consent of each Stockholder, to any affiliate or affiliates of Parent,
Acquisition or the an affiliate of any of them.
(f) Payment for and Delivery of Certificates. At the Option Closing, (i)
Parent (or its designee) shall pay, by check, an amount equal to the product of
(x) the Option Price and (y) the number of Shares owned by each Stockholder; and
(ii) each Stockholder shall deliver or shall cause to be delivered to Parent a
certificate or certificates evidencing each Stockholder's Shares, and each
Stockholder agrees that such Shares shall be transferred free and clear of all
liens. All such certificates representing Shares shall be duly endorsed in
blank, or with appropriate stock powers, duly executed in blank, attached
thereto, in proper form for transfer, with the signature of each Stockholder
thereon guaranteed, and with all applicable taxes paid or provided for.
5
<PAGE> 6
SECTION 6. Termination.
Except as otherwise provided herein, the covenants and agreements contained
herein with respect to the Shares shall terminate upon the earliest of (a)
termination of the Merger Agreement in accordance with its terms, or (b) the
Effective Time.
SECTION 7. Stockholder Capacity.
No person executing this Agreement who is or becomes during the term hereof
a director or executive officer of the Company makes any agreement or
understanding herein in his or her capacity as such director or executive
officer. Each Stockholder signs solely in his capacity as the record and/or
beneficial owner of each Stockholder's Shares.
SECTION 8. Waiver of Appraisal and Dissenter's Rights.
Each Stockholder hereby irrevocably waives any rights of appraisal or
rights to dissent from the Merger that each Stockholder may have.
SECTION 9. Miscellaneous.
(a) Certain Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
(i) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would
constitute a "group" as within the meanings of Section 13(d)(3) of the
Exchange Act.
(ii) "Misstatement" means an untrue statement of a material fact or an
omission to state a material fact required to be stated in a publicly-filed
document necessary to make the statements in such a document not
misleading.
(iii) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity.
(iv) "register," "registered," and "registration" refer to a
registration effected by preparing and filing with the SEC a registration
statement in compliance with the Securities Act and the declaration or
ordering by the SEC of effectiveness of such registration statement.
(v) "subsidiary" or "subsidiaries" of Parent, Acquisition, the Company
or any other person means any corporation, partnership, limited liability
company, association, trust, unincorporated association or other legal
entity of which the Parent, Acquisition, the Company or any such other
person, as the case may be, (either alone or through or together with any
other subsidiary) owns, directly or indirectly, 50% or more of the capital
stock the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or
other legal entity.
(b) Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersede all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
(c) Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to each Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, each Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
6
<PAGE> 7
(d) Assignment. This Agreement may not be assigned by any Stockholder
without the consent of Parent. Parent may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, with respect to each
Stockholder, except upon the execution and delivery of a written agreement
executed by the relevant parties hereto; provided that Schedule I hereto may be
supplemented by Parent by adding the name and other relevant information
concerning any stockholder of the Company who agrees to be bound by the terms of
this Agreement (by executing a counterpart signature page hereof) without the
agreement of any other party hereto, and thereafter such added stockholder shall
be treated as a "Stockholder" for all purposes of this Agreement.
(f) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be addressed to the
respective parties at the following addresses:
If to each Stockholder: At the address set forth on Schedule I
hereto.
If to Parent or
Acquisition: Ion Beam Applications s.a.
Chemin du Cyclotron, 3
B-1348 Louvain-la-Neuve, Belgium
Telephone: 011-32-10-47-5855
Telecopier: 011-32-10-47-5810
Attention: Mr. Pierre Mottet, Chief
Executive Officer
with a copy to: Dorsey & Whitney LLP
250 Park Avenue
New York, NY 10177
Telephone: (212) 415-9200
Telecopier: (212) 953-7201
Attention: Ramon P. Marks, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(h) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
7
<PAGE> 8
(i) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(j) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(k) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(l) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of laws thereof.
(m) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
8
<PAGE> 9
IN WITNESS WHEREOF, Parent and Acquisition have caused this Agreement to be
duly executed, and each Stockholder has duly executed this Agreement, as of the
day and year first above written.
ION BEAM APPLICATIONS S.A.
By: /s/ Pierre Mottet
------------------------------------
Pierre Mottet
Chief Executive Officer
ION BEAM APPLICATIONS G.P.
By: ION BEAM APPLICATIONS S.A.,
Its Partner
By: /s/ Pierre Mottet
------------------------------------
Pierre Mottet
Chief Executive Officer
IBA ACQUISITION CORP.
By: /s/ Pierre Mottet
------------------------------------
Pierre Mottet
STOCKHOLDERS:
9
<PAGE> 10
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
NAME OF STOCKHOLDER ADDRESS SHARES OWNED
------------------- ------- ------------
<S> <C> <C>
The Charles W. King, Jr. Revocable Trust 405 Alberto Way, Suite 5 Los 20,962
Dated December 17, 1986 Gatos, California 95032
The Charles W. King, III Trust Dated 405 Alberto Way, Suite 5 Los 81,050
April 15, 1983 Gatos, California 95032
The Michael James King Trust Dated April 405 Alberto Way, Suite 5 Los 81,050
15, 1983 Gatos, California 95032
The Patricia M. King Trust Dated April 405 Alberto Way, Suite 5 Los 81,050
15, 1983 Gatos, California 95032
KFFP II, L.P., a California Limited 405 Alberto Way, Suite 5 Los 400,000
Partnership Gatos, California 95032
KFFP III, L.P., a California Limited 405 Alberto Way, Suite 5 Los 1,800,000
Partnership Gatos, California 95032
The King Family Trust Dated December 16, 405 Alberto Way, Suite 5 Los 30,200
1997 Gatos, California 95032
</TABLE>
<PAGE> 11
EXHIBIT A
MERGER AGREEMENT
<PAGE> 1
(c)(3)
INDEMNIFICATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of
, 1997 between SteriGenics International, Inc., a Delaware
corporation ("the Company"), and ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee performs a valuable service for the Company; and
WHEREAS, the Board of Directors of the Company has adopted Bylaws (the
"Bylaws") providing for the indemnification of the officers and directors of the
Company to the maximum extent authorized by Section 145 of the Delaware General
Corporation Law, as amended ("Law"); and
WHEREAS, the Bylaws and the Law, by their nonexclusive nature, permit
contracts between the Company and the officers or directors of the Company with
respect to indemnification of such officers or directors; and
WHEREAS, in accordance with the authorization as provided by the Law, the
Company may purchase and maintain a policy or policies of directors' and
officers' liability insurance ("D & O Insurance"), covering certain liabilities
which may be incurred by its officers or directors in the performance of their
obligations to the Company; and
WHEREAS, in recognition of past services and in order to induce Indemnitee
to continue to serve as an officer or director of the Company, the Company has
determined and agreed to enter into this contract with Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's service as an officer or
director after the date hereof, the parties hereto agree as follows:
1. Indemnity of Indemnitee. The Company hereby agrees to hold harmless and
indemnify Indemnitee to the full extent authorized or permitted by the
provisions of the Law, as such may be amended from time to time, and Article
VII, Section 6 of the Bylaws, as such may be amended. In furtherance of the
foregoing indemnification, and without limiting the generality thereof:
(a) Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 1(a) if, by reason of his Corporate Status (as
hereinafter defined), he is, or is threatened to be made, a party to or
participant in any Proceeding (as hereinafter defined) other than a
Proceeding by or in the right of the Company. Pursuant to this Section
1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter
defined), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with
such Proceeding or any claim, issue or matter therein, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company and, with respect to any criminal Proceeding,
had no reasonable cause to believe his conduct was unlawful.
(b) Proceedings by or in the Right of the Company. Indemnitee shall be
entitled to the rights of indemnification provided in this Section 1(b) if,
by reason of his Corporate Status, he is, or is threatened to be made, a
party to or participant in any Proceeding brought by or in the right of the
Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the Company; provided, however, that, if applicable law so
provides, no indemnification against such Expenses shall be made in respect
of any claim, issue or matter in such Proceeding as to which Indemnitee
shall have been adjudged to be liable to the Company unless and to the
extent that the Court of Chancery of the State of Delaware shall determine
that such indemnification may be made.
<PAGE> 2
(c) Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to
and is successful, on the merits or otherwise, in any Proceeding, he shall
be indemnified to the maximum extent permitted by law against all Expenses
actually and reasonably incurred by him or on his behalf in connection
therewith. If Indemnitee is not wholly successful in such Proceeding but is
successful, on the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or
on his behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by
dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
2. Additional Indemnity. In addition to, and without regard to any
limitations on, the indemnification provided for in Section 1, the Company shall
and hereby does indemnify and hold harmless Indemnitee against all Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf if, by reason of his Corporate
Status, he is, or is threatened to be made, a party to or participant in any
Proceeding (including a Proceeding by or in the right of the Company),
including, without limitation, all liability arising out of the negligence or
active or passive wrongdoing of Indemnitee. The only limitation that shall exist
upon the Company's obligations pursuant to this Agreement shall be that the
Company shall not be obligated to make any payment to Indemnitee that is finally
determined (under the procedures, and subject to the presumptions, set forth in
Sections 6 and 7 hereof) to be unlawful under Delaware law.
3. Contribution in the Event of Joint Liability.
(a) Whether or not the indemnification provided in Sections 1 and 2 hereof
is available, in respect of any threatened, pending or completed action, suit or
proceeding in which Company is jointly liable with Indemnitee (or would be if
joined in such action, suit or proceeding), Company shall pay, in the first
instance, the entire amount of any judgment or settlement of such action, suit
or proceeding without requiring Indemnitee to contribute to such payment and
Company hereby waives and relinquishes any right of contribution it may have
against Indemnitee. Company shall not enter into any settlement of any action,
suit or proceeding in which Company is jointly liable with Indemnitee (or would
be if joined in such action, suit or proceeding) unless such settlement provides
for a full and final release of all claims asserted against Indemnitee.
(b) Without diminishing or impairing the obligations of the Company set
forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect
or be required to pay all or any portion of any judgment or settlement in any
threatened, pending or completed action, suit or proceeding in which Company is
jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), Company shall contribute to the amount of expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in proportion to the
relative benefits received by the Company and all officers, directors or
employees of the Company other than Indemnitee who are jointly liable with
Indemnitee (or would be if joined in such action, suit or proceeding), on the
one hand, and Indemnitee, on the other hand, from the transaction from which
such action, suit or proceeding arose; provided, however, that the proportion
determined on the basis of relative benefit may, to the extent necessary to
conform to law, be further adjusted by reference to the relative fault of
Company and all officers, directors or employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if joined in such
action, suit or proceeding), on the one hand, and Indemnitee, on the other hand,
in connection with the events that resulted in such expenses, judgments, fines
or settlement amounts, as well as any other equitable considerations which the
law may require to be considered. The relative fault of Company and all
officers, directors or employees of the Company other than Indemnitee who are
jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), on the one hand, and Indemnitee, on the other hand, shall be
determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the
degree to which their liability is primary or secondary, and the degree to which
their conduct is active or passive.
2
<PAGE> 3
(c) Company hereby agrees to fully indemnify and hold Indemnitee harmless
from any claims of contribution which may be brought by officers, directors or
employees of the Company other than Indemnitee who may be jointly liable with
Indemnitee.
4. Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee is not a
party, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith.
5. Advancement of Expenses. Notwithstanding any other provision of this
Agreement, the Company shall advance all Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding by reason of Indemnitee's Corporate
Status within ten (10) days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses. Any advances and undertakings to repay pursuant to this Section 5
shall be unsecured and interest free. Notwithstanding the foregoing, the
obligation of the Company to advance Expenses pursuant to this Section 5 shall
be subject to the condition that, if, when and to the extent that the Company
determines that Indemnitee would not be permitted to be indemnified under
applicable law, the Company shall be entitled to be reimbursed, within thirty
(30) days of such determination, by Indemnitee (who hereby agrees to reimburse
the Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Company that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to reimburse the Company for
any advance of Expenses until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).
6. Procedures and Presumptions for Determination of Entitlement to
Indemnification. It is the intent of this Agreement to secure for Indemnitee
rights of indemnity that are as favorable as may be permitted under the law and
public policy of the State of Delaware. Accordingly, the parties agree that the
following procedures and presumptions shall apply in the event of any question
as to whether Indemnitee is entitled to indemnification under this Agreement:
(a) To obtain indemnification (including, but not limited to, the
advancement of Expenses and contribution by the Company) under this
Agreement, Indemnitee shall submit to the Company a written request,
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board of Directors in writing that Indemnitee
has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
the first sentence of Section 6(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be
made in the specific case by one of the following three methods, which
shall be at the election of Indemnitee: (1) by a majority vote of the
disinterested directors, even though less than a quorum, or (2) by
independent legal counsel in a written opinion, or (3) by the stockholders.
(c) If the determination of entitlement to indemnification is to be
made by Independent Counsel pursuant to Section 6(b) hereof, the
Independent Counsel shall be selected as provided in this Section 6(c). The
Independent Counsel shall be selected by Indemnitee (unless Indemnitee
shall request that such selection be made by the Board of Directors).
Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the
Company or to Indemnitee, as the case may be, a written objection to such
selection; provided, however, that such objection may be asserted only on
the ground that the Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section 13 of this
Agreement, and the objection
3
<PAGE> 4
shall set forth with particularity the factual basis of such assertion.
Absent a proper and timely objection, the person so selected shall act as
Independent Counsel. If a written objection is made and substantiated, the
Independent Counsel selected may not serve as Independent Counsel unless
and until such objection is withdrawn or a court has determined that such
objection is without merit. If, within 20 days after submission by
Indemnitee of a written request for indemnification pursuant to Section
6(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent jurisdiction
for resolution of any objection which shall have been made by the Company
or Indemnitee to the other's selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by the court or
by such other person as the court shall designate, and the person with
respect to whom all objections are so resolved or the person so appointed
shall act as Independent Counsel under Section 6(b) hereof. The Company
shall pay any and all reasonable fees and expenses of Independent Counsel
incurred by such Independent Counsel in connection with acting pursuant to
Section 6(b) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 6(c), regardless of the
manner in which such Independent Counsel was selected or appointed.
(d) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification
under this Agreement if Indemnitee has submitted a request for
indemnification in accordance with Section 6(a) of this Agreement. Anyone
seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion, by clear and convincing evidence.
(e) Indemnitee shall be deemed to have acted in good faith if
Indemnitee's action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to
Indemnitee by the officers of the Enterprise in the course of their duties,
or on the advice of legal counsel for the Enterprise or on information or
records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected with
reasonable care by the Enterprise. In addition, the knowledge and/or
actions, or failure to act, of any director, officer, agent or employee of
the Enterprise shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement. Whether or
not the foregoing provisions of this Section 6(e) are satisfied, it shall
in any event be presumed that Indemnitee has at all times acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company. Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion, by clear and
convincing evidence.
(f) If the person, persons or entity empowered or selected under
Section 6 to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within thirty (30) days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of
such indemnification under applicable law; provided, however, that such 30
day period may be extended for a reasonable time, not to exceed an
additional fifteen (15) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating documentation
and/or information relating thereto; and provided, further, that the
foregoing provisions of this Section 6(g) shall not apply if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 6(b) of this Agreement and if (A) within
fifteen (15) days after receipt by the Company of the request for such
determination the Board of Directors or the Disinterested Directors, if
appropriate, resolve to submit such determination to the stockholders for
their consideration at an annual meeting thereof to be held within seventy
five (75) days after such receipt and such determination is made thereat,
or (B) a special meeting of stockholders is called within fifteen (15) days
after such receipt for the purpose of making such determination, such
meeting is held for such purpose within sixty (60) days after having been
so called and such determination is made thereat.
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<PAGE> 5
(g) Indemnitee shall cooperate with the person, persons or entity
making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
Independent Counsel, member of the Board of Directors, or stockholder of
the Company shall act reasonably and in good faith in making a
determination under the Agreement of the Indemnitee's entitlement to
indemnification. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person,
persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(h) The Company acknowledges that a settlement or other disposition
short of final judgment may be successful if it permits a party to avoid
expense, delay, distraction, disruption and uncertainty. In the event that
any action, claim or proceeding to which Indemnitee is a party is resolved
in any manner other than by adverse judgment against Indemnitee (including,
without limitation, settlement of such action, claim or proceeding with or
without payment of money or other consideration) it shall be presumed that
Indemnitee has been successful on the merits or otherwise in such action,
suit or proceeding. Anyone seeking to overcome this presumption shall have
the burden of proof and the burden of persuasion, by clear and convincing
evidence.
7. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 6 of
this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5
of this Agreement, (iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 6(b) of this Agreement within 90 days
after receipt by the Company of the request for indemnification, (iv) payment of
indemnification is not made pursuant to this Agreement within ten (10) days
after receipt by the Company of a written request therefor, or (v) payment of
indemnification is not made within ten (10) days after a determination has been
made that Indemnitee is entitled to indemnification or such determination is
deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee
shall be entitled to an adjudication in an appropriate court of the State of
Delaware, or in any other court of competent jurisdiction, of his entitlement to
such indemnification. Indemnitee shall commence such proceeding seeking an
adjudication within 180 days following the date on which Indemnitee first has
the right to commence such proceeding pursuant to this Section 7(a). The Company
shall not oppose Indemnitee's right to seek any such adjudication.
(b) In the event that a determination shall have been made pursuant to
Section 6(b) of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding commenced pursuant to this Section 7
shall be conducted in all respects as a de novo trial, on the merits and
Indemnitee shall not be prejudiced by reason of that adverse determination under
Section 6(b).
(c) If a determination shall have been made pursuant to Section 6(b) of
this Agreement that Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding commenced pursuant to
this Section 7, absent a prohibition of such indemnification under applicable
law.
(d) In the event that Indemnitee, pursuant to this Section 7, seeks a
judicial adjudication of his rights under, or to recover damages for breach of,
this Agreement, or to recover under any directors' and officers' liability
insurance policies maintained by the Company the Company shall pay on his
behalf, in advance, any and all expenses (of the types described in the
definition of Expenses in Section 13 of this Agreement) actually and reasonably
incurred by him in such judicial adjudication, regardless of whether Indemnitee
ultimately is determined to be entitled to such indemnification, advancement of
expenses or insurance recovery.
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<PAGE> 6
(e) The Company shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section 7 that the procedures and
presumptions of this Agreement are not valid, binding and enforceable and shall
stipulate in any such court that the Company is bound by all the provisions of
this Agreement.
8. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification as provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the certificate of incorporation of the Company,
the Bylaws, any agreement, a vote of stockholders or a resolution of directors,
or otherwise. No amendment, alteration or repeal of this Agreement or of any
provision hereof shall limit or restrict any right of Indemnitee under this
Agreement in respect of any action taken or omitted by such Indemnitee in his
Corporate Status prior to such amendment, alteration or repeal. To the extent
that a change in the Law, whether by statute or judicial decision, permits
greater indemnification than would be afforded currently under the Bylaws and
this Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change. No
right or remedy herein conferred is intended to be exclusive of any other right
or remedy, and every other right and remedy shall be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other right or remedy.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees, or
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
9. Exception to Right of Indemnification. Notwithstanding any other
provision of this Agreement, Indemnitee shall not be entitled to indemnification
under this Agreement with respect to any Proceeding brought by Indemnitee, or
any claim therein, unless (a) the bringing of such Proceeding or making of such
claim shall have been approved by the Board of Directors of the Company or (b)
such Proceeding is being brought by the Indemnitee to assert, interpret or
enforce his rights under this Agreement.
10. Duration of Agreement. All agreements and obligations of the Company
contained herein shall continue during the period Indemnitee is an officer or
director of the Company (or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and shall continue thereafter so long as
Indemnitee shall be subject to any Proceeding (or any proceeding commenced under
Section 7 hereof) by reason of his Corporate Status, whether or not he is acting
or serving in any such capacity at the time any liability or expense is incurred
for which indemnification can be provided under this Agreement. This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), assigns, spouses,
heirs, executors and personal and legal representatives. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as an
officer or director of the Company or any other Enterprise at the Company's
request.
11. Security. To the extent requested by the Indemnitee and approved by the
Board of Directors of the Company, the Company may at any time and from time to
time provide security to the Indemnitee for the
6
<PAGE> 7
Company's obligations hereunder through an irrevocable bank line of credit,
funded trust or other collateral. Any such security, once provided to the
Indemnitee, may not be revoked or released without the prior written consent of
the Indemnitee.
12. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on it hereby in order to induce
Indemnitee to serve as an officer or director of the Company, and the Company
acknowledges that Indemnitee is relying upon this Agreement in serving as an
officer or director of the Company.
(b) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral, written and implied, between the parties
hereto with respect to the subject matter hereof.
13. Definitions. For purposes of this Agreement:
(a) "Corporate Status" describes the status of a person who is or was a
director, officer, employee or agent or fiduciary of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the express written request of
the Company.
(b) "Disinterested Director" means a director of the Company who is not and
was not a party to the Proceeding in respect of which indemnification is sought
by Indemnitee.
(c) "Enterprise" shall mean the Company and any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise of
which Indemnitee is or was serving at the express written request of the Company
as a director, officer, employee, agent or fiduciary.
(d) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, participating, or being or preparing to be a
witness in a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and neither presently is, nor in
the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party (other than with respect
to matters concerning the Indemnitee under this Agreement, or of other
indemnitees under similar indemnification agreements), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement. The Company agrees to pay the reasonable fees of the Independent
Counsel referred to above and to fully indemnify such counsel against any and
all Expenses, claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.
(f) "Proceeding" includes any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed
proceeding, whether brought by or in the right of the Company or otherwise and
whether civil, criminal, administrative or investigative, in which Indemnitee
was, is or will be involved as a party or otherwise, by reason of the fact that
Indemnitee is or was a director of the Company, by reason of any action taken by
him or of any inaction on his part while acting as an officer or director of the
Company, or by reason of the fact that he is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other Enterprise; in each case whether or
not he is acting or serving in any such capacity at the time any liability or
expense is incurred for which indemnification can be provided under this
Agreement; including one pending on or before the date of this Agreement; and
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<PAGE> 8
excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement
to enforce his rights under this Agreement.
14. Severability. If any provision or provisions of this Agreement shall be
held by a court of competent jurisdiction to be invalid, void, illegal or
otherwise unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including
without limitation, each portion of any section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby and shall remain enforceable to the fullest extent permitted by law; and
(b) to the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.
15. Modification and Waiver. No supplement, modification, termination or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
16. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company
in writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any Proceeding or matter
which may be subject to indemnification covered hereunder. The failure to so
notify the Company shall not relieve the Company of any obligation which it may
have to the Indemnitee under this Agreement or otherwise unless and only to the
extent that such failure or delay materially prejudices the Company.
17. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to the address set forth below Indemnitee
signature hereto.
(b) If to the Company, to:
SteriGenics International, Inc.
4020 Clipper Court
Fremont, California 94538-6540
Attention:
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
18. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought needs
to be produced to evidence the existence of this Agreement.
19. Headings. The headings of the paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
20. Governing Law. The parties agree that this Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware without application of the conflict of laws principles thereof.
21. Gender. Use of the masculine pronoun shall be deemed to include usage
of the feminine pronoun where appropriate.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
STERIGENICS INTERNATIONAL, INC.
By:
Name:
Title:
Name:
Address:
9
<PAGE> 1
(c)(4)
ARTICLE XI
To the fullest extent permitted by applicable law, the Corporation is
authorized to provide indemnification of (and advancement of expenses to) agents
of the Corporation (and any other persons to which General Corporation Law
permits the Corporation to provide indemnification) through bylaw provisions,
agreements with such agents or other persons, vote of stockholders or
disinterested directors or otherwise, in excess of the indemnification and
advancement otherwise permitted by Section 145 of the General Corporation Law,
subject only to limits created by applicable General Corporation Law (statutory
or non-statutory), with respect to actions for breach of duty to the
Corporation, its stockholders, and others.
Any amendment, repeal or modification of the foregoing provisions of this
Article XI shall not adversely affect any right or protection of a director,
officer, agent, or other person existing at the time of, or increase the
liability of any director of the Corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to, such amendment,
repeal or modification.
<PAGE> 1
(c)(5)
ARTICLE VI
INDEMNIFICATION
6.1 Right to Indemnification. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person (an "Indemnitee") who was or is
made or is threatened to be made a party or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation or,
while a director or officer of the Corporation, is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust, enterprise or nonprofit
entity, including service with respect to employee benefit plans, against all
liability and loss suffered and expenses (including attorneys' fees) reasonably
incurred by such Indemnitee. Notwithstanding the preceding sentence, except as
otherwise provided in Section 6.3, the Corporation shall be required to
indemnify an Indemnitee in connection with a proceeding (or part thereof)
commenced by such Indemnitee only if the commencement of such proceeding (or
part thereof) by the Indemnitee was authorized by the Board of Directors of the
Corporation.
6.2 Prepayment of Expenses. The Corporation shall pay the expenses
(including attorneys' fees) incurred by an Indemnitee in defending any
proceeding in advance of its final disposition, provided, however, that, to the
extent required by law, such payment of expenses in advance of the final
disposition of the proceeding shall be made only upon receipt of an undertaking
by the Indemnitee to repay all amounts advanced if it should be ultimately
determined that the Indemnitee is not entitled to be indemnified under this
Article VI or otherwise.
6.3 Claims. If a claim for indemnification or payment of expenses under
this Article VI is not paid in full within sixty days after a written claim
therefor by the Indemnitee has been received by the Corporation, the Indemnitee
may file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving that
the Indemnitee is not entitled to the requested indemnification or payment of
expenses under applicable law.
6.4 Nonexclusivity of Rights. The rights conferred on any Indemnitee by
this Article VI shall not be exclusive of any other rights which such Indemnitee
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
6.5 Amendment or Repeal. Any repeal or modification of the foregoing
provisions of this Article VI shall not adversely affect any right or protection
hereunder of any Indemnitee in respect of any act or omission occurring prior to
the time of such repeal or modification.
6.6 Other Indemnification and Prepayment of Expenses. This Article VI
shall not limit the right of the Corporation, to the extent and in the manner
permitted by law, to indemnify and to advance expenses to persons other than
Indemnitees when and as authorized by appropriate corporate action.
<PAGE> 1
(c)(6)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into by and between
SteriGenics International, Inc. ("Employer" or the "Company"), a Delaware
corporation, and James Clouser ("Employee") as of June 10, 1999. This Agreement
shall be in effect the day immediately prior to the closing of the merger
pursuant to the Merger Agreement dated as of June 10, 1999 among Ion Beam
Applications, S.A., Ion Beam Applications, G.P., IBA Acquisition Corp. and the
Company (the "Merger"), if such Merger shall occur while the Employee performs
full-time service for the Employer. If the Merger does not occur while the
Employee performs full-time service for the Employer, this Agreement shall be
null and void in its entirety. Notwithstanding the foregoing, if the Merger
occurs and if Employee's employment with the Company is terminated prior to the
date on which the Merger occurs, and if it is reasonably demonstrated by the
Employee that such termination arose in connection with or anticipation of the
Merger, then this Agreement shall be effective the date immediately prior to the
date of such termination of employment. Finally, if the Merger Agreement is
terminated and there is no Merger, this Agreement shall be null and void.
ARTICLE I
EMPLOYMENT
1.1 Term of Agreement. This Agreement shall have a term of four (4) years
from the Merger.
1.2 Services.
(a) During the term covered by this Agreement (the "Employment Period"),
Employee shall serve as Chief Executive Officer and President of Worldwide
Contract Sterilization and Materials Radiation Processing. Employee reports
solely to the Chief Executive Officer of the Company and receives his
assignments from the Chief Executive Officer of the Company. During the
Employment Period, Employee's office and primary place of business shall be
located at the Employer's offices in either Fremont, California or Hayward,
California.
(b) Employee shall devote reasonable attention and energies and his best
efforts during normal business hours to the business and affairs of Employer and
to the discharge of his duties, functions and responsibilities hereunder, and
will use his best efforts to promote the interests of Employer. Employee shall
comply with all of Employer's rules and regulations applicable to the employees
of Employer and with all of Employer's policies established by its management
and Board of Directors. It shall not be a violation of this Agreement for
Employee to serve on corporate, civic or charitable boards or committees,
deliver lectures, speeches or teach courses at educational institutions and
manage personal investments, so long as such activities do not significantly
interfere with the performance of Employee's responsibilities under this
Agreement. It is agreed and understood that the continuance of activities
conducted before the Merger will not be deemed to interfere with Employee's
responsibilities.
1.3 Compensation and Benefits.
(a) All of the Employee's unvested shares of Company common stock and all
of the Employee's unexercisable options to purchase Company common stock shall
become exercisable immediately upon the Merger and shall remain exercisable
until one year after Employee ceases to render services to the Company.
(b) During the Employment Period, Employer will pay to Employee $500,000
per year, payable in twelve (12) monthly installments of $41,666.67, subject to
applicable federal and state withholdings, for as long as Employee's status
remains that of Employee. Employee shall be entitled to participate in all
benefit plans, incentive arrangements, perquisites and programs for employees
and senior executives as are offered from time to time and as may be described
in Employer's employee benefit handbooks as long as the Employee's service
remains full-time. Employee shall be considered annually by the Compensation
Commit-
<PAGE> 2
tee of the Board for stock, stock option grants or equity equivalents in such
amounts as are competitive with awards granted to similarly situated executives
of publicly held companies comparable to the Company.
1.4 Tax Effect of Payments to Employee.
(a) Gross-Up Payment. In the event that it is determined that any payment
or distribution of any type to or for the benefit of the Employee made in
connection with the Merger by the Company, by any of its affiliates, by any
person who acquires ownership or effective control of the Company or ownership
of a substantial portion of the Company's assets (within the meaning of section
280G of the Code and the regulations thereunder) or by any affiliate of such
person, whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (the "Total Payments"), would be subject to
the excise tax imposed by section 4999 of the Code or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest or penalties, are collectively referred to as the "Excise Tax"), then
the Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount that shall fund the payment by the Employee of any Excise
Tax on the Total Payments as well as all income taxes imposed on the Gross-Up
Payment, any Excise Tax imposed on the Gross-Up Payment and any interest or
penalties imposed with respect to taxes on the Gross-Up Payment or any Excise
Tax.
(b) Determination by Accountant. All mathematical determinations and all
determinations of whether any of the Total Payments are "parachute payments"
(within the meaning of section 280G of the Code) that are required to be made
under this Section 1.4, including all determinations of whether a Gross-Up
Payment is required, of the amount of such Gross-Up Payment and of amounts
relevant to the last sentence of this Section 1.4, shall be made by the
independent accounting firm of Ernst & Young (the "Accounting Firm"), which
shall provide its determination (the "Determination"), together with detailed
supporting calculations regarding the amount of any Gross-Up Payment and any
other relevant matters, both to the Company and to the Employee within seven
business days of the Merger, or such earlier or later time as is requested by
the Company or by the Employee (if the Employee reasonably believes that any of
the Total Payments may be subject to the Excise Tax). The applicable federal
rate in effect on the Day of Merger shall be used in all determinations. If the
Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with a written statement that such Accounting Firm
has concluded that no Excise Tax is payable (including the reasons therefor) and
that the Employee has substantial authority not to report any Excise Tax on the
Employee's federal income tax return. If a Gross-Up Payment is determined to be
payable, it shall be paid to the Employee within five business days after the
Determination is delivered to the Company or the Employee. Any determination by
the Accounting Firm shall be binding upon the Company and the Employee, absent
manifest error.
(c) Underpayments and Overpayments. As a result of uncertainty in the
application of section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments not made
by the Company should have been made ("Underpayments") or that Gross-Up Payments
will have been made by the Company which should not have been made
("Overpayments"). In either event, the Accounting Firm shall determine the
amount of the Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment shall promptly be paid by the
Company to or for the benefit of the Employee. In the case of an Overpayment,
the Employee shall, at the direction and expense of the Company, take such steps
as are reasonably necessary (including the filing of returns and claims for
refund), follow reasonable instructions from, and procedures established by, the
Company and otherwise reasonably cooperate with the Company to correct such
Overpayment; provided, however, that (i) the Employee shall in no event be
obligated to return to the Company an amount greater than the net after-tax
portion of the Overpayment that the Employee has retained or has recovered as a
refund from the applicable taxing authorities and (ii) this provision shall be
interpreted in a manner consistent with the intent of this Section 1.4, which is
to make the Employee whole, on an after-tax basis, for the application of the
Excise Tax, it being understood that the correction of an Overpayment may result
in the Employee's repaying to the Company an amount which is less than the
Overpayment.
2
<PAGE> 3
ARTICLE II
TERMINATION OF EMPLOYMENT
2.1 Death/Disability. In the event of Employee's termination of employment
due to disability during the Employment Period, Employer shall pay to Employee
the full salary outlined in Section 1.3 of this Agreement due the Employee for
the remainder of the Employment Period to be paid in a cash lump sum payment
upon termination of employment. In the event of Employee's death during the
Employment Period, Employer shall pay to Employee's spouse (or if none survives
Employee, to his estate) the full salary outlined in Section 1.3 of this
Agreement due the Employee for the remainder of the Employment Period, to be
paid in a cash lump sum payment within 30 days after death. Upon payment of the
aforementioned sum, Employer's obligations to make further payments or provide
further employee benefits shall terminate except for Section 1.4. This provision
shall not be construed to negate any rights Employee may have to death or
disability benefits under any employee benefit or welfare plan of Employer in
which Employee may from time to time be a participant or under any other written
agreement with Employer which specifically provides for such benefits.
2.2 Rights Upon Termination. Except as expressly provided in Section 2.3,
upon termination of the Employee's employment by the Employer or the Employee,
the Employee shall only be entitled to the compensation, benefits and
reimbursements described in Sections 1.3 and 1.4 above for the period preceding
the effective date of the termination.
2.3 Termination Benefits.
(a) If, during the Employment Period, the Company subjects the Employee to
actual or Constructive Termination for any reason other than Cause, or if the
Employee quits within 60 days on or after the first anniversary of the Merger,
then the Company shall pay the Employee in a cash lump sum, within 5 days of the
termination (receipt of notice if the termination is "Constructive"), the fully
salary outlined in Section 1.3 of this Agreement due the Employee for the
remainder of this Employment Period. Employer shall also, for the balance of the
four-year term of this Agreement continue to provide Employee with all of the
benefits described in Section 1.3(b) above. To the extent the applicable benefit
plans, incentive arrangements, perquisites or programs described in Section
1.3(b) above prohibit the provision of such benefits to the Employee after
termination of employment, the Employer shall pay Employee the monetary
equivalent to such benefits in a cash lump sum.
(b) For the purposes of this Agreement, Constructive Termination shall
mean:
(i) any reduction in Employee's status or authority;
(ii) any reduction of Employee's responsibilities or assignment of
duties inconsistent with Employee's position or authority contemplated in
Section 1.2(a) above;
(iii) reduction of Employee's compensation or benefits; or
(iv) relocation of Employee's place of employment or a requirement to
travel to a substantially greater extent than required prior to the Merger.
Any good faith determination by Employee that there has been a
"Constructive Termination" shall be conclusive and shall be delivered to the
Company in writing.
(c) For the purposes of this Agreement, Cause shall mean:
(i) Employee's intentional unauthorized use or disclosure of the
confidential information or trade secrets of the Company, which use or
disclosure causes material harm to the Company;
(ii) conviction of, or a plea of "guilty" or "no contest" to, a felony
under the laws of the United States or any state thereof; or
(iii) Employee's repeated intentional failure to perform assigned
duties after receiving written notification from the Board of Directors.
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<PAGE> 4
No act or failure to act of Employee shall be "intentional" if it is
performed in good faith by the Employee with the reasonable belief that the
action or inaction was in the best interests of the Company. Employee shall not
be deemed terminated for "Cause" unless and until there has been delivered to
Employee a copy of a resolution adopted by three-quarters of the entire Board at
a meeting of the Board called and held for such purpose, provided Employee and
his counsel are given an opportunity to attend and participate in the meeting.
The minutes of such meeting shall specify in detail the grounds for termination
for Cause.
ARTICLE III
NON-COMPETITION, NON-SOLICITATION AND NON-DISCLOSURE
3.1 During the Employment Period (whether or not the Employee's employment
continues for the entire Employment Period), Employee shall not, directly or
indirectly, either as an individual or as an employee, agent, consultant,
advisor, independent contractor, general partner, officer, director,
stockholder, investor, lender, or in any other capacity whatsoever, of any
person, firm, corporation or partnership:
(a) Participate or engage in the design, development, manufacture,
production, marketing, sale or servicing of any product, or the provision
of any service, that directly or indirectly relates to Company business
(the "Business") as it is conducted in the United States or in any other
country in which the Company engages in Business;
(b) Induce or attempt to induce any person who at the time of such
inducement is an employee of Employer to perform work or service for any
other person or entity other than Employer; or
(c) Permit the name of Employee to be used in connection with a
competitive business.
(d) Notwithstanding the foregoing, Employee may own, directly or
indirectly, solely as an investment, up to one percent (1%) of any class of
"publicly traded securities" of any person or entity which owns a
competitive business. For the purposes of this Agreement, the term
"publicly traded securities" shall mean securities that are traded on a
national securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System.
(e) If any restriction set forth in this Section 3.1 is held to be
unreasonable, the Employee agrees, and hereby submits, to the reduction and
limitation of such prohibition to such area or period as shall be deemed
reasonable.
3.2 The Employee has entered into a Proprietary Information and Inventions
Agreement with the Company, which is incorporated herein by reference.
ARTICLE IV
MISCELLANEOUS
4.1 Successors, Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Employer and its successors and assigns. If a successor
fails to expressly assume this Agreement within 5 days of the Merger, Employee
shall be entitled to the benefits stated in sections 1.3(a) and 2.3(a) on the
5th day following the Merger. This Agreement shall be binding upon Employee and
shall inure to his benefit and to the benefit of his heirs, executors,
administrators and legal representatives, but shall not be assignable by
Employee.
4.2 Entire Agreement. This Agreement constitutes the entire agreement
between Employer and Employee relating to his employment and the additional
matters herein provided for. This Agreement supersedes and replaces any prior
verbal or written agreements between the parties except as provided herein. This
Agreement may be amended or altered only in a writing signed by the Chief
Executive Officer, President or Chief Financial Officer of Employer and by
Employee.
4.3 Applicable Law, Severability. This Agreement is executed by the
parties in the State of California and shall be construed and interpreted in
accordance with the laws of that state. If any provision of this
4
<PAGE> 5
Agreement becomes or is deemed invalid, illegal or unenforceable in any
jurisdiction by reason of the scope, extent or duration of its coverage, then
such provision shall be deemed amended to the extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision cannot be
so amended without materially altering the intention of the parties, then such
provision shall be stricken and the remainder of this Agreement shall continue
in full force and effect. Should there ever occur any conflict between any
provision contained in this Agreement and any present or future statue, law,
ordinance or regulation contrary to which the parties have no legal right to
contract, the latter shall prevail, but the provision of this Agreement affected
thereby shall be curtailed and limited only to the extent necessary to bring it
into compliance with the law. All the other terms and provisions of this
Agreement shall continue in full force and effect without impairment or
limitation.
4.4 Arbitration. Employee agrees that any and all disputes that Employee
has with Employer or any of its employees, which arise out of Employee's
employment, the termination of employment, or under the terms of this Agreement
shall be resolved through final and binding arbitration. This shall include,
without limitation, disputes relating to this Agreement, any disputes regarding
Employee's employment by Employer or the termination thereof, claims for breach
of contract or breach of the covenant of good faith and fair dealing, and any
claims of discrimination or other claims under any federal, state or local law
or regulation now in existence or hereinafter enacted and as amended from time
to time concerning in any way the subject of Employee's employment with Employer
or its termination. The only claims not covered by this Section 4.4 are claims
for benefits under the workers' compensation laws or unemployment insurance laws
and claims for indemnification. Binding arbitration will be conducted in San
Francisco, California in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association (the "AAA") or such other
mediation or arbitration service as shall be mutually agreeable to the parties,
and judgment upon the award rendered by the arbitrator shall be final and
binding on the parties and may be entered in any court having jurisdiction
thereof; provided, however, that any party shall be entitled to appeal a
question of law or determination of law to a court of competent jurisdiction.
Such arbitration shall be conducted by an arbitrator chosen by mutual agreement
of the parties, or failing such agreement, an arbitrator appointed by the AAA.
There shall be limited discovery prior to the arbitration hearing as follows:
(a) exchange of witness lists and copies of documentary evidence and documents
related to or arising out of the issues to be arbitrated, (b) depositions of all
party witnesses, and (c) such other depositions as may be allowed by the
arbitrator upon a showing of good cause. Depositions shall be conducted in
accordance with the California Code of Civil Procedure. The arbitrator shall be
required to provide in writing to the parties the basis for the award or order
of such arbitrator, and a court reporter shall record all hearings (unless
otherwise agreed to by the parties), with such record constituting the official
transcript of such proceedings. Employee understands and agrees that the
arbitration shall be instead of any civil litigation and that the arbitrator's
decision shall be final and binding to the fullest extent permitted by law and
enforceable by any court having jurisdiction thereof.
4.5 Attorneys' Fees. Employer shall pay Employee's attorneys' fees with
respect to the preparation of this Agreement and with respect to any and all
disputes that Employee has with Employer or any of its employees, which arise
out of Employee's employment or service to the Company, the termination of
Employee's employment or service to the Company, or under the terms of this
Agreement.
4.6 Late Payment Penalty. If any payment hereunder is not made within 15
business days of its due date, the delinquent payment shall be increased by 150%
so that the Company is liable for the delinquent payment and the penalty amount.
4.7 Indemnification and Release. The Company will indemnify Employee to
the fullest extent permitted by applicable law, and as may be provided in the
Company's bylaws, and will advance litigation costs including attorney fees. In
addition, upon a termination of employment under Section 2.3(a), the parties
shall execute mutual releases and will agree not to prosecute any legal action
or other proceeding based on the released claims.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written below.
Dated: June 10, 1999 STERIGENICS INTERNATIONAL, INC.
By: /s/ David E. Meyer
Its: Vice President
Address: c/o SteriGenics
International, Inc.
4020 Clipper Court
Fremont, CA 94538-6540
Dated: June 10, 1999 EMPLOYEE
/s/ James F. Clouser
James Clouser
Address: 18 Orange Blossom Court
Danville, CA 94526
SIGNATURE PAGE TO EMPLOYMENT AGREEMENT
6
<PAGE> 7
EXHIBIT A
Proprietary Information and Inventions Agreement
<PAGE> 1
EXHIBIT (c)(7)
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of , 1999, by and between
(the "Employee") and STERIGENICS INTERNATIONAL, INC., a Delaware
corporation (the "Company").
1. TERM OF AGREEMENT.
This Agreement shall remain in effect from the date hereof until the
earlier of:
(a) The date when the Company terminates the Employee's employment for
Cause or the date on which the Employee resigns without Good Reason; or
(b) The date when the Company has met all of its obligations under
this Agreement following a termination of the Employee's employment without
Cause or the Employee's resignation for Good Reason within 12 months
following a Change in Control.
2. DEFINITION OF CHANGE IN CONTROL.
For all purposes under this Agreement, "Change in Control" shall mean the
occurrence of any of the following events after the date of this Agreement:
(a) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization;
(b) The sale, transfer or other disposition of all or substantially
all of the Company's assets;
(c) A change in the composition of the Board, as a result of which
fewer than two-thirds of the incumbent directors are directors who either
(i) had been directors of the Company on the date 24 months prior to the
date of the event that may constitute a Change in Control (the "original
directors") or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so
approved; or
(d) Any transaction as a result of which any person is the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 50% of the
total voting power represented by the Company's then outstanding voting
securities. For purposes of this Subsection (d), the term "person" shall
have the same meaning as when used in sections 13(d) and 14(d) of the
Exchange Act but shall exclude (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of subsidiary
of the Company and (ii) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
3. DEFINITION OF GOOD REASON.
For all purposes under this Agreement, "Good Reason" shall mean that the
Employee:
(a) Has incurred a material reduction in his authority or
responsibilities as an employee of the Company, including (without
limitation) a material reduction or elimination of his authority to approve
expenditures or to hire, promote, demote or terminate subordinates;
(b) Has incurred a reduction in his base salary or target bonus, other
than pursuant to a Company-wide reduction of salaries for employees of the
Company generally; or
<PAGE> 2
(c) Has been notified that his principal place of work as an employee
of the Company will be relocated by a distance of 40 miles or more.
4. DEFINITION OF CAUSE.
For all purposes under this Agreement, "Cause" shall mean:
(a) The unauthorized use or disclosure of the confidential information
or trade secrets of the Company, which use or disclosure causes material
harm to the Company;
(b) Conviction of, or a plea of "guilty" or "no contest" to, a felony
under the laws of the United States or any state thereof;
(c) Gross negligence;
(d) Material failure to comply with Company policy after receiving
written notification from the Board of Directors; or
(e) Continued failure to perform assigned duties after receiving
written notification from the Board of Directors.
The foregoing, however, shall not be deemed an exclusive list of all acts or
omissions that the Company (or a subsidiary of the Company) may consider as
grounds for the discharge of the Employee.
5. CASH PAYMENT AND ACCELERATED VESTING OF STOCK OPTIONS AND SHARES.
(a) CASH PAYMENT. The Employee shall be entitled to a lump sum cash payment
equal to the Employee's most recent base salary amount for a two-year period if
one of the following events occurs:
(i) Within the first 12-month period after the occurrence of a Change
in Control, the Employee voluntarily resigns his employment for Good
Reason; or
(ii) Within the first 12-month period after the occurrence of a Change
in Control, the Company terminates the Employee's employment for any reason
other than Cause.
(b) ACCELERATED VESTING. Upon a Change in Control, to the extent that the
Employee's options do not otherwise provide for full vesting acceleration, the
Employee shall be entitled to the accelerated vesting of stock options described
below.
(i) All options to purchase shares of the Company's Common Stock held
by the Employee at the time of the Change in Control shall immediately
become exercisable and vested in full, whether such options were granted
before or after the date of this Agreement.
(ii) All shares of the Company's Common Stock held by the Employee at
the time of the Change in Control shall immediately vest in full and the
Company's right to repurchase such shares shall lapse, whether such shares
were issued before or after the date of this Agreement.
To the extent provided in this Section 5, this Agreement shall be deemed to
be an amendment of the exercisability and vesting provisions of all stock option
agreements, stock purchase agreements and similar instruments executed by the
Employee and the Company that did not otherwise provide for full vesting
acceleration.
(c) POOLING OF INTERESTS. If the Company and the other party to the
transaction constituting a Change in Control agree that such transaction is to
be treated as a "pooling of interests" for financial reporting purposes, and if
such transaction in fact is so treated, then the accelerated vesting of stock
options and shares described in this Section 5 and the cash payment described in
this Section 5 shall not occur to the extent that the Company's independent
public accountants and such other party's independent public accountants
separately determine in good faith that such cash payment or acceleration would
preclude the use of "pooling of interests" accounting.
2
<PAGE> 3
6. LIMITATION ON PAYMENTS.
(a) APPLICATION OF LIMITATION. This Section 6 shall apply only if the
Employee, on an after-tax basis, would receive more value under this Agreement
after the application of this Section 6 than before the application of this
Section 6. For this purpose, "after-tax basis" shall mean a calculation taking
into account all federal and state income and excise taxes imposed on the
Employee, including (without limitation) the excise tax described in section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"). If this
Section 6 is applicable, it shall supersede any conflicting provision of this
Agreement. The rules set forth in this Section 6 supersede all other agreements
between the Employee and the Company with respect to whether the Company shall
make a payment or property transfer to, or for the benefit of, the Employee that
would subject the Employee to the excise tax described in section 4999 of the
Code, and Section 6 of this Agreement shall be deemed to be an amendment of such
agreements.
(b) BASIC RULE. The Company shall not make any payment or property transfer
to, or for the benefit of, the Employee (under this Agreement or otherwise) that
would subject the Employee to the excise tax described in section 4999 of the
Code. All calculations required by this Section 6 shall be performed by the
independent auditors retained by the Company most recently prior to the Change
in Control (the "Auditors"), based on information supplied by the Company and
the Employee, and shall be binding on the Company and the Employee. All fees and
expenses of the Auditors shall be paid by the Company.
(c) REDUCTIONS. If the amount of the aggregate payments or property
transfers to the Employee must be reduced under this Section 6, then the
Employee shall direct in which order the payments or transfers are to be
reduced, but no change in the timing of any payment or transfer shall be made
without the Company's consent. As a result of uncertainty in the application of
section 4999 of the Code at the time of an initial determination by the Auditors
hereunder, it is possible that a payment will have been made by the Company that
should not have been made (an "Overpayment") or that an additional payment that
will not have been made by the Company could have been made (an "Underpayment").
In the event that the Auditors, based upon the assertion of a deficiency by the
Internal Revenue Service against the Employee that the Auditors believe has a
high probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee that he
shall repay to the Company, together with interest at the applicable federal
rate specified in section 7872(f)(2) of the Code; provided, however, that no
amount shall be payable by the Employee to the Company if and to the extent that
such payment would not reduce the amount that is subject to an excise tax under
section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to, or for the benefit of, the Employee, together
with interest at the applicable federal rate specified in section 7872(f)(2) of
the Code.
7. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. The Company shall require any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets, by an agreement in substance and form satisfactory to the
Employee, to assume this Agreement and to agree expressly to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform it in the absence of a succession. For all purposes under
this Agreement, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this Subsection (a) or which becomes bound by this Agreement by
operation of law.
(b) EMPLOYEE'S SUCCESSORS. This Agreement and all rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
8. MISCELLANEOUS PROVISIONS.
(a) NOTICE. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall
3
<PAGE> 4
be addressed to him at the home address which he most recently communicated to
the Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.
(b) WAIVER. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(d) NO RETENTION RIGHTS. Nothing in this Agreement shall confer upon the
Employee any right to continue in service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company or any
subsidiary of the Company or of the Employee, which rights are hereby expressly
reserved by each, to terminate his or her service at any time and for any
reason, with or without Cause.
(e) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (other than their choice-of-law provisions).
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
--------------------------------------
Employee
STERIGENICS INTERNATIONAL, INC.
By:
------------------------------------
Title:
-----------------------------------
4
<PAGE> 1
EXHIBIT (c)(8)
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of , 1999, by and between
(the "Employee") and STERIGENICS INTERNATIONAL, INC., a Delaware
corporation (the "Company").
1. TERM OF AGREEMENT.
This Agreement shall remain in effect from the date hereof until the
earlier of:
(a) The date when the Company terminates the Employee's employment for
Cause or the date on which the Employee resigns without Good Reason; or
(b) The date when the Company has met all of its obligations under
this Agreement following a termination of the Employee's employment without
Cause or the Employee's resignation for Good Reason within 12 months
following a Change in Control.
2. DEFINITION OF CHANGE IN CONTROL.
For all purposes under this Agreement, "Change in Control" shall mean the
occurrence of any of the following events after the date of this Agreement:
(a) The consummation of a merger or consolidation of the Company with
or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity's
securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other
reorganization;
(b) The sale, transfer or other disposition of all or substantially
all of the Company's assets;
(c) A change in the composition of the Board, as a result of which
fewer than two-thirds of the incumbent directors are directors who either
(i) had been directors of the Company on the date 24 months prior to the
date of the event that may constitute a Change in Control (the "original
directors") or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election or
nomination and the directors whose election or nomination was previously so
approved; or
(d) Any transaction as a result of which any person is the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 50% of the
total voting power represented by the Company's then outstanding voting
securities. For purposes of this Subsection (d), the term "person" shall
have the same meaning as when used in sections 13(d) and 14(d) of the
Exchange Act but shall exclude (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of subsidiary
of the Company and (ii) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
3. DEFINITION OF GOOD REASON.
For all purposes under this Agreement, "Good Reason" shall mean that the
Employee:
(a) Has incurred a material reduction in his authority or
responsibilities as an employee of the Company, including (without
limitation) a material reduction or elimination of his authority to approve
expenditures or to hire, promote, demote or terminate subordinates;
<PAGE> 2
(b) Has incurred a reduction in his base salary or target bonus, other
than pursuant to a Company-wide reduction of salaries for employees of the
Company generally; or
(c) Has been notified that his principal place of work as an employee
of the Company will be relocated by a distance of 40 miles or more.
4. DEFINITION OF CAUSE.
For all purposes under this Agreement, "Cause" shall mean:
(a) The unauthorized use or disclosure of the confidential information
or trade secrets of the Company, which use or disclosure causes material
harm to the Company;
(b) Conviction of, or a plea of "guilty" or "no contest" to, a felony
under the laws of the United States or any state thereof;
(c) Gross negligence;
(d) Material failure to comply with Company policy after receiving
written notification from the Board of Directors; or
(e) Continued failure to perform assigned duties after receiving
written notification from the Board of Directors.
The foregoing, however, shall not be deemed an exclusive list of all acts or
omissions that the Company (or a subsidiary of the Company) may consider as
grounds for the discharge of the Employee.
5. CASH PAYMENT AND ACCELERATED VESTING OF STOCK OPTIONS AND SHARES.
(a) CASH PAYMENT. The Employee shall be entitled to a lump sum cash payment
equal to the Employee's most recent base salary amount for a one-year period if
one of the following events occurs:
(i) Within the first 12-month period after the occurrence of a Change
in Control, the Employee voluntarily resigns his employment for Good
Reason; or
(ii) Within the first 12-month period after the occurrence of a Change
in Control, the Company terminates the Employee's employment for any reason
other than Cause.
(b) ACCELERATED VESTING. Upon a Change in Control, to the extent that the
Employee's options do not otherwise provide for full vesting acceleration, the
Employee shall be entitled to the accelerated vesting of stock options described
below.
(i) All options to purchase shares of the Company's Common Stock held
by the Employee at the time of the Change in Control shall immediately
become exercisable and vested in full, whether such options were granted
before or after the date of this Agreement.
(ii) All shares of the Company's Common Stock held by the Employee at
the time of the Change in Control shall immediately vest in full and the
Company's right to repurchase such shares shall lapse, whether such shares
were issued before or after the date of this Agreement.
To the extent provided in this Section 5, this Agreement shall be deemed to
be an amendment of the exercisability and vesting provisions of all stock option
agreements, stock purchase agreements and similar instruments executed by the
Employee and the Company that did not otherwise provide for full vesting
acceleration.
(c) POOLING OF INTERESTS. If the Company and the other party to the
transaction constituting a Change in Control agree that such transaction is to
be treated as a "pooling of interests" for financial reporting purposes, and if
such transaction in fact is so treated, then the accelerated vesting of stock
options and shares described in this Section 5 and the cash payment described in
this Section 5 shall not occur to the extent that the Company's independent
public accountants and such other party's independent public accountants
separately determine in good faith that such cash payment or acceleration would
preclude the use of "pooling of interests" accounting.
2
<PAGE> 3
6. LIMITATION ON PAYMENTS.
(a) APPLICATION OF LIMITATION. This Section 6 shall apply only if the
Employee, on an after-tax basis, would receive more value under this Agreement
after the application of this Section 6 than before the application of this
Section 6. For this purpose, "after-tax basis" shall mean a calculation taking
into account all federal and state income and excise taxes imposed on the
Employee, including (without limitation) the excise tax described in section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"). If this
Section 6 is applicable, it shall supersede any conflicting provision of this
Agreement. The rules set forth in this Section 6 supersede all other agreements
between the Employee and the Company with respect to whether the Company shall
make a payment or property transfer to, or for the benefit of, the Employee that
would subject the Employee to the excise tax described in section 4999 of the
Code, and Section 6 of this Agreement shall be deemed to be an amendment of such
agreements.
(b) BASIC RULE. The Company shall not make any payment or property transfer
to, or for the benefit of, the Employee (under this Agreement or otherwise) that
would subject the Employee to the excise tax described in section 4999 of the
Code. All calculations required by this Section 6 shall be performed by the
independent auditors retained by the Company most recently prior to the Change
in Control (the "Auditors"), based on information supplied by the Company and
the Employee, and shall be binding on the Company and the Employee. All fees and
expenses of the Auditors shall be paid by the Company.
(c) REDUCTIONS. If the amount of the aggregate payments or property
transfers to the Employee must be reduced under this Section 6, then the
Employee shall direct in which order the payments or transfers are to be
reduced, but no change in the timing of any payment or transfer shall be made
without the Company's consent. As a result of uncertainty in the application of
section 4999 of the Code at the time of an initial determination by the Auditors
hereunder, it is possible that a payment will have been made by the Company that
should not have been made (an "Overpayment") or that an additional payment that
will not have been made by the Company could have been made (an "Underpayment").
In the event that the Auditors, based upon the assertion of a deficiency by the
Internal Revenue Service against the Employee that the Auditors believe has a
high probability of success, determine that an Overpayment has been made, such
Overpayment shall be treated for all purposes as a loan to the Employee that he
shall repay to the Company, together with interest at the applicable federal
rate specified in section 7872(f)(2) of the Code; provided, however, that no
amount shall be payable by the Employee to the Company if and to the extent that
such payment would not reduce the amount that is subject to an excise tax under
section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to, or for the benefit of, the Employee, together
with interest at the applicable federal rate specified in section 7872(f)(2) of
the Code.
7. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. The Company shall require any successor (whether
direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets, by an agreement in substance and form satisfactory to the
Employee, to assume this Agreement and to agree expressly to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform it in the absence of a succession. For all purposes under
this Agreement, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this Subsection (a) or which becomes bound by this Agreement by
operation of law.
(b) EMPLOYEE'S SUCCESSORS. This Agreement and all rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
8. MISCELLANEOUS PROVISIONS.
(a) NOTICE. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall
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be addressed to him at the home address which he most recently communicated to
the Company in writing. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Secretary.
(b) WAIVER. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.
(c) SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
(d) NO RETENTION RIGHTS. Nothing in this Agreement shall confer upon the
Employee any right to continue in service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company or any
subsidiary of the Company or of the Employee, which rights are hereby expressly
reserved by each, to terminate his or her service at any time and for any
reason, with or without Cause.
(e) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California (other than their choice-of-law provisions).
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
--------------------------------------
Employee
STERIGENICS INTERNATIONAL, INC.
By:
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Title:
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