<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
ADVANCE CIRCUITS, INC.
(NAME OF SUBJECT COMPANY)
ACI ACQUISITION CORPORATION
(BIDDER)
COMMON STOCK, PAR VALUE $.10 PER SHARE
(TITLE OF CLASS OF SECURITIES)
007383 10 2
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
D. MCL. MILLER
JOHNSON MATTHEY INC.
460 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087-1880
(610) 971-3000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF BIDDER)
----------------
COPY TO:
JAMES G. ARCHER
SIDLEY & AUSTIN
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 906-2000
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
AMOUNT OF
TRANSACTION FILING
VALUATION* FEE**
----------- ----------
<S> <C>
$172,054,100 $34,410.82
</TABLE>
--------
* Based on the offer to purchase all outstanding shares of Common Stock of the
Subject Company at $22.50 cash per share and information furnished by the
Company to the Purchaser that as of May 27, 1995, there were 7,564,895
shares of Common Stock outstanding and 81,954 shares of Common Stock
reserved for issuance pursuant to outstanding warrants and employee stock
options.
** 1/50 of 1% of Transaction Valuation.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
--------- ---------
Form or Registration No.: N/A Date Filed: N/A
--------- ---------
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<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Advance Circuits, Inc., a Minnesota
corporation (the "Company"), and the address of its principal executive offices
is 5929 Baker Road, Suite 470, Minnetonka, Minnesota 55345.
(b) This Schedule relates to the offer by ACI Acquisition Corporation, a
Minnesota corporation (the "Purchaser"), which is an indirect wholly owned
subsidiary of Johnson Matthey Public Limited Company, an English public limited
company ("Parent"), to purchase all outstanding shares of Common Stock, par
value $0.10 per share (the "Shares"), of the Company at $22.50 per Share, net
to the seller in cash, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated August 21, 1995 (the "Offer to Purchase"), and
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. The information set forth in the Introduction
and Section 1 of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (g) The information set forth in Section 9 of the Offer to Purchase
is incorporated herein by reference. The name, age, business address, present
principal occupation or employment, the material occupations, positions,
offices or employments for the past five years and citizenship of each director
and executive officer of the Purchaser, Parent and Johnson Matthey Inc., a
Pennsylvania corporation and the sole shareholder of the Purchaser and an
indirect wholly owned subsidiary of Parent ("JMI"), and the name, age,
principal business and address of any corporation or other organization in
which such occupations, positions, offices and employments are or were carried
on are set forth in Schedule I to the Offer to Purchase and incorporated herein
by reference.
(e)-(f) During the last five years, none of the Purchaser, Parent or JMI or,
to the best of the Purchaser's knowledge, any of the directors or executive
officers of the Purchaser, Parent or JMI has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such law.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in Sections 9, 11 and 12 of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction and Sections 7 and 12
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference.
2
<PAGE>
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Sections 9, 11 and 12 of
the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 of the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 of the Offer to Purchase is
incorporated herein by reference. Reference is hereby made to the excerpts from
Parent's Annual Report 1995 and Annual Report 1994 containing audited
consolidated financial statements of Parent at March 31, 1993, 1994 and 1995,
and for each of the fiscal years in the three-year period ended March 31, 1995,
a copy of which is attached hereto as Exhibit (g) and which is incorporated in
its entirety herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b)-(c) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
(e) None.
(f) Reference is hereby made to the Offer to Purchase and the Agreement and
Plan of Merger, copies of which are attached hereto as Exhibits (a)(1) and (c),
respectively, and which are incorporated in their entirety herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated August 21, 1995.
(2) Form of letter of Transmittal with respect to the Shares.
(3) Form of letter dated August 21, 1995, from Dillon, Read & Co. Inc. to
brokers, dealers, commercial banks, trust companies and nominees.
(4) Form of letter to be sent by brokers, dealers, commercial banks, trust
companies and nominees to their clients.
(5) Notice of Guaranteed Delivery.
(6) IRS Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Joint Press Release dated August 15, 1995.
(8) Form of summary advertisement dated August 21, 1995.
(9) Press Release dated August 21, 1995.
(b) Form of Parent Revolving Credit Facility Agreements and Schedule of Banks
with which Parent has Revolving Credit Facility Agreements.
3
<PAGE>
(c) Agreement and Plan of Merger dated as of August 14, 1995, among the
Purchaser, Parent and the Company.
(d) None.
(e) Not applicable.
(f) None.
(g) Excerpts from Parent's Annual Report 1995 and Annual Report 1994
containing audited consolidated financial statements of Parent at March 31,
1993, 1994 and 1995, and for each of the fiscal years in the three-year period
ended March 31, 1995.
(h) Minutes of a meeting of a sub-committee of Parent's Board of Directors
authorizing D. McL. Miller to sign the Tender Offer Statement on Schedule 14D-
1.
4
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: August 21, 1995
ACI Acquisition Corporation
By: /s/ D. McL. Miller
---------------------------------
Name: D. McL. Miller
Title: Secretary
Johnson Matthey Inc.
By: /s/ D. McL. Miller
---------------------------------
Name: D. McL. Miller
Title: Vice President and General
Counsel
Johnson Matthey Public Limited
Company
By: /s/ D. McL. Miller
---------------------------------
Authorized Representative
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
(a)(1) Offer to Purchase dated August 21, 1995..............................
(2) Form of letter of Transmittal with respect to the Shares.............
(3) Form of letter dated August 21, 1995, from Dillon, Read & Co. Inc. to
brokers, dealers, commercial banks, trust companies and nominees....
(4) Form of letter to be sent by brokers, dealers, commercial banks,
trust companies and nominees to their clients.......................
(5) Notice of Guaranteed Delivery........................................
(6) IRS Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.................................................
(7) Joint Press Release dated August 15, 1995............................
(8) Form of summary advertisement dated August 21, 1995..................
(9) Press Release dated August 21, 1995..................................
(b) Form of Parent Revolving Credit Facility Agreements and Schedule of
Banks with which Parent has Revolving Credit Facility Agreements....
(c) Agreement and Plan of Merger dated as of August 14, 1995, among the
Purchaser, Parent and the Company...................................
(d) None.................................................................
(e) Not applicable.......................................................
(f) None.................................................................
(g) Excerpts from Parent's Annual Report 1995 and Annual Report 1994
containing audited consolidated financial statements of Parent at
March 31, 1993, 1994 and 1995, and for each of the fiscal years in
the three-year period ended March 31, 1995..........................
(h) Minutes of a meeting of a sub-committee of Parent's Board of
Directors authorizing D. McL. Miller to sign the Tender Offer
Statement on Schedule 14D-1.........................................
</TABLE>
<PAGE>
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ADVANCE CIRCUITS, INC.
AT
$22.50 NET PER SHARE
BY
ACI ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
-------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 18, 1995, UNLESS EXTENDED.
-------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF ADVANCE CIRCUITS, INC., ACTING UPON THE UNANIMOUS
RECOMMENDATION OF A SPECIAL COMMITTEE OF THE BOARD, HAS UNANIMOUSLY ADOPTED
RESOLUTIONS APPROVING THE OFFER, DETERMINING THAT THE TERMS OF THE OFFER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS AND
RECOMMENDING THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
THAT WOULD REPRESENT AT LEAST 51% OF ALL OUTSTANDING SHARES ON A FULLY DILUTED
BASIS ON THE DATE OF PURCHASE.
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile copy thereof) in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required
by Instruction 1 to the Letter of Transmittal, and mail or deliver the Letter
of Transmittal (or such facsimile), or in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2, cause an Agent's
Message (as defined herein) and any other required documents to be transmitted
or furnished, to the Depositary and either deliver the certificates for such
Shares to the Depositary along with the Letter of Transmittal (or such
facsimile) or deliver such Shares pursuant to the procedure for book-entry
transfer set forth in Section 2 or (2) request such shareholder's broker,
dealer, bank, trust company or other nominee to effect the transaction for
such shareholder. A shareholder having Shares registered in the name of a
broker, dealer, bank, trust company or other nominee must contact his broker,
dealer, bank, trust company or other nominee if such shareholder desires to
tender such Shares.
If a shareholder desires to tender Shares and such shareholder's
certificates for such Shares are not immediately available or the procedure
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 shareholder's tender may be effected by following the
procedures for guaranteed delivery set forth in Section 2.
Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other related materials may be directed to
the Information Agent.
----------------
The Dealer Manager for the Offer is:
DILLON, READ & CO. INC.
August 21, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
INTRODUCTION.............................................................. 3
THE TENDER OFFER.......................................................... 4
1. Terms of the Offer................................................... 4
2. Procedure for Tendering Shares....................................... 5
3. Withdrawal Rights.................................................... 8
4. Acceptance for Payment and Payment................................... 8
5. Certain Federal Income Tax Consequences.............................. 9
6. Price Range of the Shares; Dividends on the Shares................... 10
7. Effect of the Offer on the Market for the Shares; Stock Quotation;
Exchange Act Registration; Margin Regulations........................ 11
8. Certain Information Concerning the Company........................... 12
9. Certain Information Concerning the Purchaser and Parent.............. 15
10. Source and Amount of Funds........................................... 18
11. Background of the Offer.............................................. 19
12. Purpose of the Offer; Merger Agreement............................... 21
13. Dividends and Distributions.......................................... 25
14. Certain Conditions of the Offer...................................... 26
15. Certain Legal Matters................................................ 28
16. Fees and Expenses.................................................... 31
17. Miscellaneous........................................................ 31
SCHEDULE I................................................................ S-1
</TABLE>
2
<PAGE>
TO ALL HOLDERS OF COMMON STOCK OF
ADVANCE CIRCUITS, INC.:
INTRODUCTION
ACI Acquisition Corporation, a Minnesota corporation (the "Purchaser"), which
is an indirect wholly owned subsidiary of Johnson Matthey Public Limited
Company, an English public limited company ("Parent"), hereby offers to
purchase all outstanding shares of Common Stock, par value $0.10 per share (the
"Shares"), of Advance Circuits, Inc., a Minnesota corporation (the "Company"),
at a price of $22.50 per Share, net to the seller in cash, without interest
thereon (the "Offer Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal
(which, together with any amendments or supplements hereto or thereto,
collectively constitute the "Offer"). Tendering shareholders will not be
obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 to the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer. The Purchaser will pay all agreed fees and
expenses of Chemical Mellon Shareholder Services (the "Depositary") and
Georgeson & Company Inc. (the "Information Agent").
The Company has informed the Purchaser that, as of May 27, 1995, there were
7,564,895 Shares outstanding and 81,954 Shares reserved for issuance pursuant
to outstanding warrants and employee stock options. Accordingly, upon the
purchase of at least 3,899,893 Shares pursuant to the Offer, the Purchaser
would own at least 51% of the Shares outstanding based on the number of Shares
outstanding, and assuming the issuance of the number of Shares reserved for
issuance as described above, as of May 27, 1995.
On August 14, 1995, the Purchaser, Parent and the Company entered into an
Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which the
Purchaser will be merged with and into the Company (the "Merger"). The Merger
Agreement provides that the Offer will be the first step in Parent's proposed
acquisition of the entire equity interest in the Company. In the Merger, each
outstanding Share (except those Shares that are owned by the Company, any
subsidiary of the Company, Parent, the Purchaser or any other subsidiary of
Parent or that are subject to dissenters' rights) will be converted into the
right to receive $22.50 in cash, without interest. The Merger is subject to a
number of conditions, including approval by the shareholders of the Company.
See Section 12.
Certain Federal income tax consequences of the sale of Shares pursuant to the
Offer and the Merger are described in Section 5.
ON AUGUST 14, 1995, THE BOARD OF DIRECTORS OF THE COMPANY, ACTING ON THE
UNANIMOUS RECOMMENDATION OF A SPECIAL COMMITTEE OF THE BOARD, UNANIMOUSLY
ADOPTED RESOLUTIONS APPROVING THE OFFER, THE MERGER AND THE MERGER AGREEMENT,
DETERMINING THAT THE TERMS OF THE OFFER AND MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDING, SUBJECT TO THE
TERMS AND CONDITIONS SET FORTH IN THE MERGER AGREEMENT, THAT THE COMPANY'S
SHAREHOLDERS ACCEPT THE OFFER. ALL THE DIRECTORS AND EXECUTIVE OFFICERS OF THE
COMPANY HAVE ADVISED THE COMPANY THAT THEY INTEND TO TENDER THEIR SHARES
PURSUANT TO THE OFFER.
ALEX. BROWN & SONS INCORPORATED ("ALEX BROWN") DELIVERED TO THE COMPANY ITS
WRITTEN OPINION THAT THE CONSIDERATION TO BE RECEIVED BY HOLDERS OF THE SHARES
PURSUANT TO THE OFFER AND THE MERGER IS FAIR TO SUCH SHAREHOLDERS FROM A
FINANCIAL POINT OF VIEW. A COPY OF THE OPINION OF ALEX BROWN IS CONTAINED IN
THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION
WITH THE OFFER, A COPY OF WHICH IS BEING FURNISHED TO SHAREHOLDERS CONCURRENTLY
HEREWITH.
3
<PAGE>
THE TENDER OFFER
1.TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth in the Offer, the
Purchaser will accept for payment and pay for all outstanding Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 3. The term "Expiration Date" means 12:00 Midnight, New
York City Time, on Monday, September 18, 1995, unless and until the Purchaser,
in its sole discretion, shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Offer, as so extended by the Purchaser, will expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
(THE "MINIMUM NUMBER OF SHARES") THAT WOULD REPRESENT AT LEAST 51% OF THE FULLY
DILUTED SHARES (AS DEFINED IN SECTION 14) ON THE DATE OF PURCHASE (THE "MINIMUM
TENDER CONDITION"). THE PURCHASER RESERVES THE RIGHT (SUBJECT TO THE APPLICABLE
RULES AND REGULATIONS OF THE COMMISSION), WHICH IT PRESENTLY HAS NO INTENTION
OF EXERCISING, TO WAIVE OR REDUCE THE MINIMUM TENDER CONDITION AND TO ELECT TO
PURCHASE, PURSUANT TO THE OFFER, LESS THAN THE MINIMUM NUMBER OF SHARES. SEE
SECTION 14.
Subject to the applicable rules and regulations of the Commission and the
terms and provisions of the Merger Agreement, the Purchaser reserves the right,
in its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events or facts set forth in Section 14 hereof shall
have occurred, to (i) extend the period of time during which the Offer is open,
and thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (ii)
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE PURCHASE PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If by 12:00 Midnight, New York City time, on Monday, September 18, 1995 (or
any date or time then set as the Expiration Date), any or all of the conditions
to the Offer have not been satisfied or waived, the Purchaser reserves the
right (but shall not be obligated), subject to the applicable rules and
regulations of the Commission and the terms and provisions of the Merger
Agreement, to (i) terminate the Offer and not accept for payment or pay for any
Shares and return all tendered Shares to tendering shareholders, (ii) waive all
the unsatisfied conditions and accept for payment and pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn,
(iii) extend the Offer and, subject to the right of shareholders to withdraw
Shares until the Expiration Date, retain the Shares that have been tendered
during the period or periods for which the Offer is extended or (iv) amend the
Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the announcement be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) 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
shareholders in connection with the Offer be promptly disseminated to
shareholders in a manner reasonably designed to inform shareholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service. As used in this Offer
to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for
4
<PAGE>
Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may retain tendered Shares
on behalf of the Purchaser and such Shares may not be withdrawn except to the
extent tendering shareholders are entitled to withdrawal rights as described in
Section 3. However, the ability of the Purchaser to delay the payment for
Shares that the Purchaser has accepted for payment is limited by Rule 14e-1(c)
under the Exchange Act, which requires that a bidder pay the consideration
offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of such bidder's offer.
If the 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,
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the offer or information concerning
the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities
sought, a minimum period of 10 business days is generally required to allow for
adequate dissemination to shareholders and investor response.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed by the Purchaser to record holders of Shares and will be
furnished by the Purchaser to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
shareholder lists 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 TENDERING SHARES
VALID TENDER. For a shareholder validly to 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, in
the case of a book-entry transfer, an Agent's Message (as defined below), 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 prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a Book-
Entry Confirmation (as defined below) received by the Depositary), in each case
prior to the Expiration Date, or (ii) the tendering shareholder must comply
with the guaranteed delivery procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company, the Midwest Securities Trust Company and the
Philadelphia Depository Trust Company (the "Book-Entry Transfer Facilities")
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 any of the
Book-Entry Transfer Facilities' systems may make book-entry delivery of Shares
by causing a Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with that Book-Entry Transfer Facility's
procedures for such transfer. However, although delivery of Shares may be
effected through book-entry transfer into the Depositary's account at a Book-
Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message, and any other required documents, must, in any case, be
furnished or 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 shareholder 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 SUCH BOOK-
ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
5
<PAGE>
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 a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgement from the participant in such Book-
Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
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.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant
in any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of 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 the Letter of Transmittal or (ii) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(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 certificates for Shares are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for Shares not
tendered or not accepted for payment are to be returned to a person other than
the registered owner of the certificates surrendered, the tendered
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, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the Letter
of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates for Shares are not immediately
available or the procedure 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 shareholder's tender may be
effected if all the following conditions are met: (i) such tender is made by
or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Purchaser, is received by the Depositary, as provided below, prior to the
Expiration Date; and (iii) the certificates for all tendered Shares, in proper
form for transfer, (or a Book-Entry Confirmation with respect to the book-
entry transfer of all such Shares), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other required documents are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which The NASDAQ Stock
Market, Inc.'s National Market (the "NASDAQ National Market") operated by the
National Association of Securities Dealers, Inc. (the "NASD") is open for
business. The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or 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) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (ii) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (iii) any other documents required by the Letter of Transmittal.
6
<PAGE>
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR THE TENDERED SHARES, REGARDLESS OF
ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing the Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of the Purchaser as
such shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares and other securities or rights issued or issuable in
respect of such Shares on or after August 14, 1995. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such shareholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Shares or other securities or rights will be
revoked and no subsequent powers of attorney, proxies, consents or revocations
may be given (and, if given, will not be deemed effective). The designees of
the Purchaser will thereby be empowered to exercise all voting and other rights
with respect to such Shares or other securities or rights in respect of any
annual, special or adjourned meeting of the Company's shareholders, actions by
written consent in lieu of any such meeting or otherwise, as they in their sole
discretion deem proper. The Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of such Shares, the Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares
and other securities or rights, including voting at any meeting of
shareholders.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
shareholder whether or not similar defects or irregularities are waived in the
case of other shareholders. No tender of Shares will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or waived. None of the Purchaser, Parent, the Depositary, the Information
Agent, the Dealer Manager or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of
the terms and conditions of the Offer (including the Letter of Transmittal and
the instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal income
tax on payments of cash pursuant to the Offer, a shareholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such shareholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such shareholder is not subject to backup withholding. If a
shareholder does not provide such shareholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS")
may impose a penalty on such shareholder and payment of cash to such
shareholder pursuant to the Offer may be subject to backup withholding of 31%.
All shareholders surrendering Shares pursuant to the Offer should complete and
sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to the Purchaser and the Depositary).
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not
7
<PAGE>
subject to backup withholding. Noncorporate foreign shareholders should
complete and sign the main signature form and a Form W-8, Certificate of
Foreign Status, a copy of which may be obtained from the Depositary, in order
to avoid backup withholding. See Instruction 9 to the Letter of Transmittal.
3.WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after October 20, 1995.
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 and
must specify the name of the person having 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, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted 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 as set forth in Section 2, any notice
of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's
procedures. 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 again
following one of the procedures described in Section 2 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
4.ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer, the Purchaser will
accept for payment and will pay for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 3
promptly after the Expiration Date. All questions as to the satisfaction of
such terms and conditions will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. See Sections 1 and
14. The 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, including, without limitation, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). Any such
delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer).
Parent filed a Notification and Report Form with respect to the Offer under
the HSR Act on August 21, 1995. The waiting period under the HSR Act with
respect to the Offer will expire at 11:59 P.M., New York City time, on
September 5, 1995. However, the Federal Trade Commission (the "FTC") or the
Antitrust Division of the Department of Justice (the "Antitrust Division") may
extend the waiting period by requesting additional information or documentary
material from Parent. If such a request is made, such waiting period will
expire at 11:59 P.M., New York City Time, on the 10th day after Parent has
substantially complied with such request. See Section 15 hereof for additional
information concerning the HSR Act and the applicability of the antitrust laws
to the Offer.
8
<PAGE>
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (ii) a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and (iii) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any shareholder
pursuant to the Offer will be the highest per Share consideration paid to any
other shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit
of the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange
Act), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering shareholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering shareholder (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 procedure set forth in Section 2, such Shares will be
credited to an account maintained at the appropriate Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Parent, or to one or more direct or indirect wholly owned
subsidiaries of Parent, the right to purchase Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve the Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
5.CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also be a taxable transaction under
applicable state, local or foreign income or other tax laws. Generally, for
Federal income tax purposes, a tendering shareholder will recognize gain or
loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer or the Merger and the aggregate tax basis in
the Shares tendered by the shareholder and purchased pursuant to the Offer or
converted in the Merger, as the case may be. Gain or loss will be calculated
separately for each block of Shares tendered and purchased pursuant to the
Offer or converted in the Merger, as the case may be.
If Shares are held by a shareholder as capital assets, gain or loss
recognized by the shareholder will be capital gain or loss, which will be long-
term capital gain or loss if the shareholder's holding period for the Shares
exceeds one year. Under present law, long-term capital gains recognized by an
individual shareholder will generally be taxed at a maximum Federal marginal
tax rate of 28%, and long-term capital gains recognized by a corporate
shareholder will be taxed at a maximum Federal marginal tax rate of 35%.
9
<PAGE>
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the shareholder
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
shareholder that does not furnish its TIN may be subject to a penalty imposed
by the IRS. See "Procedure for Tendering Shares--Backup Withholding".
If backup withholding applies to a shareholder, the Depositary is required to
withhold 31% from payments to such shareholder. 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 shareholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO HOLDERS OF
SHARES WHO ARE SUBJECT TO SPECIAL TAX TREATMENT UNDER THE CODE, SUCH AS NON-
U.S. PERSONS, LIFE INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL
INSTITUTIONS, AND MAY NOT APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL
CIRCUMSTANCES. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE TAX CONSEQUENCES PARTICULAR TO THEM (INCLUDING THE APPLICATION
AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE
OFFER AND THE MERGER.
6.PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded in the over-the-counter market and prices are quoted on
the NASDAQ National Market under the symbol "ADVC". The following table sets
forth, for the periods indicated, the high and low last reported sales prices
for the Shares as reported by the NASDAQ National Market, as well as the amount
of cash dividends paid per Share for each such period.
<TABLE>
<CAPTION>
SALES PRICE
--------------
HIGH LOW
------ -----
<S> <C> <C>
Fiscal 1993:
First Quarter.......................................... $ 8 3/8 $ 5 3/8
Second Quarter......................................... $ 12 $ 8 1/2
Third Quarter.......................................... $ 14 3/4 $10 1/4
Fourth Quarter......................................... $13 5/8 $ 8 1/2
Fiscal 1994:
First Quarter.......................................... $ 12 3/4 $ 9 7/8
Second Quarter......................................... $ 16 3/4 $11 3/4
Third Quarter.......................................... $15 3/8 $ 11 1/8
Fourth Quarter......................................... $ 12 1/8 $ 9 3/8
Fiscal 1995:
First Quarter.......................................... $ 12 1/2 $ 9 1/2
Second Quarter......................................... $ 15 1/4 $ 12 3/16
Third Quarter.......................................... $ 15 3/4 $ 12 1/16
Fourth Quarter (through August 18, 1995)............... $ 22 1/8 $ 14
</TABLE>
On August 14, 1995, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement and the commencement of
the Offer, the last reported sale quotation of the Shares as reported by the
NASDAQ National Market was $16 1/8 per Share. On August 18, 1995, the closing
price of the Shares as so reported was $21 3/4 per Share. SHAREHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended August 27, 1994 (the "Form 10-K"), the Company has never paid any
dividends on the Shares.
10
<PAGE>
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
MARKET FOR THE SHARES. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and, depending upon the number of Shares so purchased,
could adversely affect the liquidity and market value of the remaining Shares
held by the public.
STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion in the NASDAQ National Market, which require that an issuer
have at least 200,000 publicly held shares, held by at least 400 shareholders
or 300 shareholders of round lots, with a market value of at least $1,000,000,
and have net tangible assets of at least $1,000,000, $2,000,000 or $4,000,000,
depending on profitability levels during the issuer's four most recent fiscal
years. If these standards are not met, the Shares might nevertheless continue
to be included in the NASD's NASDAQ Small-Cap Market(TM) (the "NASDAQ Stock
Market") with quotations published in the NASDAQ "additional list" or in one of
the "local lists", but if the number of holders of the Shares were to fall
below 300, or if the number of publicly held Shares were to fall below 100,000
or there were not at least two registered and active market makers for the
Shares, the NASD's rules provide that the Shares would no longer be "qualified"
for NASDAQ Stock Market reporting and the NASDAQ Stock Market would cease to
provide any quotations. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Shares are not considered
as being publicly held for this purpose. According to the Form 10-K, as of
November 4, 1994, there were approximately 500 holders of record of Shares and,
according to the Company's Quarterly Report on Form 10-Q for the quarter ended
May 27, 1995 (the "Third Quarter Form 10-Q"), as of May 27, 1995, there were
7,564,895 Shares outstanding. If as a result of the purchase of Shares pursuant
to the Offer or otherwise, the Shares no longer meet the requirements of the
NASD for continued listing in the NASDAQ National Market or in any other tier
of the NASDAQ Stock Market and the listing of the Shares is discontinued, the
market for the Shares could be adversely affected.
If the NASD were to delist the Shares, it is possible that the Shares would
continue to trade in the over-the-counter market and that price quotations
would be reported by other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend upon such
factors as the number of shareholders remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the
possible termination of registration under the Exchange Act as described below,
and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act,
the requirement of furnishing a proxy statement pursuant to Section 14(a) of
the Exchange Act in connection with shareholders' meetings and the related
requirement of an annual report to shareholders and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions.
Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933,
as amended. The Purchaser intends to seek to cause the Company to apply for
termination of registration of the Shares under the Exchange Act as soon after
the completion of the Offer as the requirements for such termination are met.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among
11
<PAGE>
other things, of allowing brokers to extend credit on the collateral of the
Shares. Depending on factors similar to those described above regarding listing
and market quotations, it is possible that, following 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 loans made by brokers.
8.CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Minnesota corporation with its principal executive offices
at 5929 Baker Road (Suite 470), Minnetonka, Minnesota 55345. According to the
Form 10-K, the Company is engaged in the business of marketing, assisting in
designing and manufacturing to customers' specifications complex interconnect
devices commonly known as printed circuit boards.
HISTORICAL SUMMARY FINANCIAL STATEMENTS. Set forth below is certain summary
consolidated financial information with respect to the Company derived from the
information contained in the Company's Annual Report for the fiscal year ended
August 27, 1994 (the "Annual Report"), the Company's Registration Statement on
Form S-4, Registration No. 33-85952 (the "Form S-4"), and the Third Quarter
Form 10-Q. 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 reports and other
documents and all the financial information (including any related notes)
contained therein. Such reports and other documents may be examined and copies
may be obtained in the manner set forth below under "Available Information".
ADVANCE CIRCUITS, INC.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
-------------------------------- -----------------
AUGUST 27, AUGUST 28, AUGUST 29, MAY 27, MAY 28,
1994 1993 1992 1995(1) 1994
---------- ---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................. $143,488 $125,716 $101,708 $127,839 $106,387
Gross profit.............. 22,109 22,057 14,348 19,563 16,396
Net income ............... 8,928 8,927 4,811 7,226 6,492
Net income per share(2)... 1.25 1.25 0.68 0.98 0.91
BALANCE SHEET DATA:
(at end of period)
Working capital........... $ 19,759 $ 17,618 $ 11,988 $ 19,647 $ 19,230
Total assets.............. 69,665 57,374 44,587 81,587 62,273
Long-term debt, less cur-
rent maturities.......... 51 365 294 25 58
Shareholders' investment.. 49,225 39,989 30,791 59,665 46,744
</TABLE>
--------
(1) The summary consolidated financial information of the Company set forth
herein for the nine months ended May 27, 1995, reflects the Company's
acquisition of Acsist Associates Inc. ("Acsist") from December 2, 1994, the
date of acquisition. Certain summary historical financial statements of
Acsist and certain pro forma financial statements reflecting the Company's
acquisition of Acsist are set forth below under "Acquisition of Acsist".
(2) The weighted average number of Shares outstanding (in thousands) during the
fiscal years ended August 27, 1994, August 28, 1993, and August 29, 1992,
was 7,168, 7,118, and 7,074, respectively, and such average during the nine
months ended May 27, 1995, and May 28, 1994, was 7,387 and 7,173,
respectively.
12
<PAGE>
ACQUISITION OF ACSIST. On December 2, 1994, the Company acquired Acsist, a
manufacturer of complex multilayer circuit boards and multi-chip modules, for
an aggregate of 240,000 Shares. Certain historical financial statements of
Acsist as constituted prior to the acquisition and certain pro forma combined
financial statements of the Company and Acsist reflecting the acquisition of
Acsist are set forth in the Form S-4 and in the Third Quarter Form 10-Q. Such
financial statements are available in the manner set forth below under
"Available Information". Set forth below is certain information derived from
the historical and pro forma combined financial statements of the Company and
Acsist contained in the Form S-4 and the Third Quarter Form 10-Q, or otherwise
furnished by the Company to Parent. The following summary is qualified in its
entirety, however, by reference to such financial statements and the related
notes contained in the Form S-4 and the Third Quarter Form 10-Q:
ADVANCE CIRCUITS, INC. AND ACSIST ASSOCIATES INC.
SUMMARY PRO FORMA COMBINED FINANCIAL INFORMATION (1)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA COMBINED
----------------------- -----------------------------------
FISCAL YEAR FISCAL YEAR
ENDED ENDED FISCAL YEAR NINE MONTHS NINE MONTHS
AUGUST 27, JUNE 30, ENDED ENDED ENDED
1994 1994 AUGUST 27, MAY 27, MAY 28,
ACI ACSIST 1994 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $143,488 $ 11,859 $155,347 $130,396 $115,692
Gross profit............ 22,109 1,389 23,498 20,189 18,188
Net income (loss)....... 8,928 (620) 8,274 6,186 6,451
Net income (loss) per
share before
extraordinary item (2). 1.25 -- 1.02 .84 .80
Net income (loss) per
share (2).............. 1.25 -- 1.12 .84 .87
BALANCE SHEET DATA:
(at end of period)
Working capital......... $ 19,759 $ (1,983) $ 19,364 $ 19,647 $ 19,226
Total assets............ 69,665 4,774 74,392 81,587 67,895
Long-term debts less
current maturities..... 51 203 254 25 306
Shareholders' invest-
ment................... 49,225 407 51,685 59,665 49,305
</TABLE>
--------
(1) The unaudited pro forma condensed combined statements of operations set
forth in the Form S-4 and the Third Quarter 10-Q assume the acquisition of
Acsist was completed at the beginning of the respective periods presented
and the unaudited pro forma condensed combined balance sheet set forth in
the Form S-4 assumes such acquisition was completed on August 27, 1994.
(2) The weighted average number of Shares outstanding (in thousands) during the
fiscal year ended August 27, 1994, was 7,168 and such average during the
nine months ended May 27, 1995, and May 28, 1994, was 7,387 and 7,173,
respectively.
13
<PAGE>
ESTIMATE OF RESULTS FOR FISCAL YEAR 1995; BUDGET FOR FISCAL YEAR 1996. The
Purchaser has conducted a review of the Company and has received certain non-
public information from the Company pursuant to the terms of the
Confidentiality Agreement (as defined in Section 11). In connection with this
review, the Company provided Parent on August 11, 1995, with an estimate of
results for the Company's fiscal year ending August 26, 1995, and a budget for
the fiscal year ending August 31, 1996 (the "Budget"), which included the
information set forth below. Such estimated operating results for 1995 are
unaudited and are subject to adjustment in connection with the preparation of
fiscal year-end results.
ADVANCE CIRCUITS, INC.
MANAGEMENT'S ESTIMATED RESULTS/BUDGET
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ESTIMATED RESULTS BUDGET FOR
FOR THE YEAR ENDING THE YEAR ENDING
AUGUST 26, 1995 AUGUST 31, 1996
------------------- ---------------
<S> <C> <C>
Net Sales............................... $173,311 $228,557
Gross Profit............................ 23,827 34,807
Net Income.............................. 8,020 13,632
Earnings per share of Common Stock...... $ 1.08 $ 1.80
Weighted average number of common shares
outstanding............................ 7,400 7,550
</TABLE>
The Company attributes the decline in gross margin from 15.4% for the year
ended August 26, 1994, and 15.3% for the nine months ended May 25, 1995, to
13.8% estimated for the year ending August 26, 1995, to the following: (i)
continuing yield problems experienced by Acsist in its development of processes
for its transition to producing plastic packages for the semiconductor
industry; (ii) lower margins in its specialty products division as a result of
converting from military to commercial products; and (iii) increased sales as a
percentage of total sales from its flexible assembly unit, Targ-It-Tronics,
which have a lower gross margin than its other products.
The Budget was prepared based on numerous assumptions, including price and
volume assumptions, the achievability of improved gross profit margins and
specific capital expenditures. The Company does not as a matter of course
publicly disclose projections as to future revenues or earnings. The Budget was
not prepared with a view to public disclosure or compliance with the published
guidelines of the Commission or the guidelines established by the American
Institute of Certified Public Accountants regarding projections, and is
included in this Offer to Purchase only because such information was made
available to Parent. The Budget was prepared for internal use and capital
budgeting and other management decision-making purposes and is subjective in
many respects and thus susceptible to various interpretations and periodic
revision based on actual experience and business developments. NONE OF THE
PURCHASER, PARENT, THE COMPANY OR ANY OF THEIR RESPECTIVE FINANCIAL ADVISORS OR
ANY OF THEIR RESPECTIVE DIRECTORS OR OFFICERS ASSUMES ANY RESPONSIBILITY FOR
THE ACCURACY OF THE BUDGET. The Company's independent auditors have not
examined or compiled the Budget presented herein and, accordingly, assume no
responsibility therefor. In addition, because the estimates and assumptions,
many of which are not set forth herein, underlying the Budget are inherently
subject to significant economic and competitive uncertainties and contingencies
which are difficult or impossible to predict accurately and are beyond the
Purchaser's and the Company's control, there can be no assurance that the
Budget will be realized. Accordingly, it is expected that there will be
differences between actual and projected results, and actual results may be
materially higher or lower than those set forth above.
AVAILABLE INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file reports with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, stock options and other
matters, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required
14
<PAGE>
to be disclosed in proxy statements distributed to the Company's shareholders
and filed with the Commission. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium, 500 West
Madison Street (Suite 1400), Chicago, Illinois 60661. Copies of such material
may be obtained, by mail, upon payment of the Commission's customary charges,
by writing to the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material should also be available for inspection
at the offices of The NASDAQ Stock Market, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for 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.
DCIS INVESTIGATION. The Defense Criminal Investigation Service ("DCIS") has
commenced an investigation (the "DCIS Investigation") of the Company. The DCIS
is a part of the United States Department of Defense and is responsible for
investigating defense contract misconduct committed by prime contractors or
sub-contractors. The Company's specialty products division produces printed
circuit boards for the Company's military and aerospace customers, including
companies that are prime contractors for the Department of Defense. The Company
has never been a prime contractor for the Department of Defense.
The Company became aware of the DCIS Investigation upon the execution of a
search warrant on June 28, 1995, which was followed by a subpoena for
documents. The DCIS Investigation is in its preliminary stages and no charges
have been filed. The Company does not know the likely time-frame for the
investigation or whether the Company or any of its officers or employees are
likely to be charged with any offense. It is a condition to the Offer that
there be no change or development in the DCIS Investigation that could
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole. See Section 14.
9.CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
GENERAL. The Purchaser, a Minnesota corporation, was incorporated on August
1, 1995 for the purpose of acquiring the Company. The Purchaser has not
conducted any other business. The principal office of the Purchaser is located
at 460 East Swedesford Road, Wayne, Pennsylvania 19087-1880. The Purchaser is a
direct, wholly owned subsidiary of Johnson Matthey Inc., a Pennsylvania
corporation ("JMI"). JMI is a manufacturer or producer of autocatalysts,
catalytic industrial air pollution control systems, chemical and metallurgical
products, precious metal chemicals, fuel cell catalysts, die attach adhesives
(used to affix the completed semiconductor chip or die into its protective
package) and thermocouple assemblies, and is involved in materials technology
operations and precious metals refining.
JMI is an indirect, wholly owned subsidiary of Parent, which has its
principal office at 2-4 Cockspur Street, Trafalgar Square, London SW1Y 5BQ.
Parent's principal businesses are the production of electronic materials,
specialty chemicals and pharmaceutical compounds; the manufacture of catalysts
and pollution control systems; the refining, fabrication and marketing of
precious metals and the manufacturing of decorative and specialized materials
for the ceramics, plastics, paint, ink and construction industries.
The name, age, business address, present principal occupation or employment
and citizenship of each of the directors and executive officers of the
Purchaser, JMI and Parent are set forth in Schedule I hereto.
15
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION. Neither the Purchaser nor JMI nor
Parent is subject to the informational filing requirements of the Exchange Act
and, accordingly, none of them files reports or other information with the
Commission relating to its business, financial condition or other matters.
However, the Purchaser and Parent have furnished to the Commission as an
exhibit to their Tender Offer Statement on Schedule 14D-1 with respect to the
Offer audited consolidated financial statements of Parent at March 31, 1993,
1994 and 1995, and for each of the years in the three-year period ended March
31, 1995 (collectively, the "Parent Financial Statements"). The Parent
Financial Statements have been prepared in accordance with accounting
principles generally accepted in the United Kingdom ("UK GAAP"), which differ
in certain significant respects from accounting principles generally accepted
in the United States ("US GAAP"). Immediately following Parent's summary
consolidated financial information set forth below is a brief summary of
certain differences between UK GAAP and US GAAP. Neither the Purchaser nor
Parent has examined whether adjustments necessary to conform the Parent
Financial Statements with US GAAP would be material. The Parent Financial
Statements may be inspected at the Commission's public reference facilities in
Washington, D.C., and copies thereof may be obtained from such facilities upon
payment of the Commission's customary charges, in the manner set forth in
Section 8 above under "Available Information" (although they will not be
available at the regional offices of the Commission). Set forth below is
certain summary consolidated financial information excerpted or derived from
the Parent Financial Statements. Such summary information is qualified in its
entirety by reference to the Parent Financial Statements and all the financial
information and related notes contained therein.
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS OF POUNDS STERLING(1), EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------------------------
1995 1994 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Turnover....................... (Pounds)2,177.8 (Pounds)1,955.0 (Pounds)1,853.7
Net revenues................... 355.1 391.0 333.7
Operating profit............... 100.4 81.6 70.8
Profit on ordinary activities
before interest............... 99.7 69.9 75.3
Profit on ordinary activities
before taxation............... 95.4 65.3 73.8
Profit attributable to share-
holders....................... 63.9 44.4 50.1
PER SHARE DATA:
Earnings per ordinary share(2). 33.4 pence 23.5 pence 27.1 pence
BALANCE SHEET DATA:
(at end of period)
Net current assets............. (Pounds) 124.9 (Pounds) 167.0 (Pounds) 151.5
Total assets................... 727.4 725.7 685.7
Total liabilities.............. 347.2 357.0 353.1
Shareholders' funds............ 380.2 368.7 332.6
</TABLE>
--------
(1) Parent publishes its financial statements in pounds sterling. The United
States dollar exchange rate for pounds sterling based on the 5:00 pm buying
rate in New York City (the "Closing Rate") on August 18, 1995, was U.S.
$1.5393 = (Pounds)1. The following table sets forth, for the fiscal years,
periods and dates indicated, certain information concerning the Closing
Rate.
(2) The weighted average number of shares outstanding (in thousands) during the
fiscal years ended March 31, 1993, 1994 and 1995 was 184,878, 188,744 and
191,329, respectively.
16
<PAGE>
<TABLE>
<CAPTION>
AT PERIOD END AVERAGE* HIGH LOW
------------- -------- ------ ------
(U.S.$ PER (Pounds)1)
<S> <C> <C> <C> <C>
Fiscal 1993............................. 1.5145 1.6925 2.0063 1.4180
Fiscal 1994............................. 1.4840 1.5056 1.5875 1.4600
Fiscal 1995............................. 1.6215 1.5558 1.6524 1.4641
</TABLE>
--------
(*) The average of the Closing Rate on each business day during the period.
CERTAIN DIFFERENCES BETWEEN UK GAAP AND US GAAP. While the following is not a
comprehensive summary of all the differences between UK GAAP and US GAAP, other
differences are unlikely to have a significant effect on the consolidated
income or shareholders' funds of Parent.
Goodwill and US Purchase Accounting. Under US GAAP and UK GAAP, purchase
consideration in respect of subsidiaries acquired is allocated on the basis of
appraised values to the various net assets of the subsidiaries at the dates of
acquisition and any net balance is treated as goodwill. Under US GAAP, goodwill
is amortized over a period up to 40 years as a charge against earnings, whereas
under UK GAAP goodwill generally is written off in the first year, not as a
charge against earnings but as a deduction from shareholders' equity.
Acquisition-Related Expenses. Under UK GAAP, certain acquisition-related
expenses are dealt with entirely in the year in which they arise, whether
through allocation to the profit and loss account or direct allocation to
reserves. Under US GAAP such expenses are amortized over the period of the
related transaction.
Ordinary Dividends. Under UK GAAP, final ordinary dividends are provided for
in the fiscal year in respect of which they are recommended by the Board of
Directors for approval by the shareholders. Under US GAAP, such dividends are
not provided for until declared by the Board of Directors.
Asset Revaluations. Under UK GAAP, asset revaluations are permitted. Except
in connection with purchase accounting, revaluations of assets are not
permitted under US GAAP and, accordingly, the excess of the written-up value
over original cost less aggregate depreciation is not included in shareholders'
equity.
Earnings Per Share. Under UK GAAP, the average number of shares issued in
prior years is restated to reflect the bonus element of any rights issue of
shares in the current year. No such adjustment is made under US GAAP.
CERTAIN INTERESTS IN PARENT'S ORDINARY SHARE CAPITAL. Parent has been advised
of the following notifiable interests in its ordinary share capital as at
August 14, 1995:
<TABLE>
<S> <C>
Garrick Investment Holdings Ltd ("Garrick")........................... 19.72%
Schroder Investment Management Ltd.................................... 15.67%
Prudential Group of companies......................................... 5.69%
</TABLE>
Garrick holds its interest through its wholly owned subsidiaries, Tygon
Investments Limited ("Tygon") and Jaguar Investments Limited ("Jaguar"). In
terms of Section 203(2)(b) of the United Kingdom Companies Act 1985, Minorco
and JCI (Isle of Man) Limited, a wholly owned subsidiary of JCI Limited
("JCI"), by virtue of their joint (50/50) interest in the equity share capital
of Garrick, are taken to have an interest in all the shares in which Garrick is
interested. Anglo American Corporation of South Africa Limited ("Anglo") and De
Beers Consolidated Mines Limited ("De Beers"), by virtue of Anglo's interest of
more than one third in the equity share capital of Minorco and JCI, and De
Beers' interest of more than one third in the equity share capital of Anglo,
are also taken to have an interest in the same shares.
Minorco has agreed to underwrite the entitlements of both Tygon and Jaguar in
the Rights Offering (as defined in Section 10) conducted by Parent, in exchange
for which it will receive certain underwriting commissions. See "Source and
Amount of Funds--Rights Offering".
17
<PAGE>
Except as otherwise stated in this Offer to Purchase, none of the Purchaser,
Parent or, to the best knowledge of the Purchaser, any of the persons listed in
Schedule I hereto, or any associate or majority-owned subsidiary of the
Purchaser, Parent or any of the persons so listed, beneficially owns any equity
security of the Company, and none of the Purchaser, Parent or, to the best
knowledge of the Purchaser, any of the other persons referred to above, or any
of the respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in any equity security of the Company
during the past 60 days.
Except as otherwise stated in this Offer to Purchase, (i) there have not been
any contacts, transactions or negotiations between the Purchaser, Parent, any
of their respective subsidiaries or, to the best knowledge of the Purchaser,
any of the persons listed in Schedule I hereto, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand,
that are required to be disclosed pursuant to the rules and regulations of the
Commission, (ii) there are no present or proposed material contracts,
arrangements, understandings or relationships between the Purchaser, Parent,
their respective controlling persons or subsidiaries or, to the best knowledge
of the Purchaser, any of the persons listed in Schedule I hereto, on the one
hand, and the Company or any of its controlling persons, subsidiaries,
executive officers or directors, on the other hand, and (iii) none of the
Purchaser, Parent or, to the best knowledge of the Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement,
understanding or relationship with any person with respect to any securities of
the Company.
10.SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. If all the
Shares outstanding (and all Shares issuable upon exercise of options or
warrants outstanding with an exercise price equal to or less than the Offer
Price) as of May 27, 1995, are purchased pursuant to the Offer, the maximum
amount required by the Purchaser to purchase such Shares will be approximately
$171 million. Purchaser expects to obtain the necessary funds directly or
indirectly from Parent. Parent will obtain the funds initially through existing
bank facilities, which Parent expects to repay with proceeds from its fully
underwritten rights offering in the United Kingdom, all as described below.
BANK FACILITIES. Parent is party to several revolving credit facility
agreements with several banks (the "Bank Agreements"). Each Bank Agreement has
a term expiring on or after March 15, 1996. Parent currently has available
borrowing capacity under the Bank Agreements of approximately (Pounds)295
million (approximately $470 million). Borrowings under the Bank Agreements are
unsecured and bear interest at rates ranging from 0.15% to 0.30% per annum over
the London Interbank Offered Rate.
The Bank Agreements contain customary representations and warranties,
covenants and events of default.
The foregoing summary of the Bank Agreements is qualified in its entirety by
reference to the Bank Agreements, the form of which has been filed as an
exhibit to the Tender Offer Statement on Schedule 14D-1 filed with the
Commission by Parent and the Purchaser with respect to the Offer.
RIGHTS OFFERING. Parent has made arrangements to offer (the "Rights
Offering") to qualifying holders of its ordinary shares by way of rights (the
"Rights") up to 24,123,741 new ordinary shares (the "New Shares") at a price of
500 pence per New Share to raise approximately (Pounds)117.4 million
(approximately $188 million, based on the Noon Buying Rate on August 18, 1995),
net of expenses, on the basis of one New Share for every eight ordinary shares
held. The proceeds of the Rights Offering will be used to, among other things,
repay amounts borrowed under the Bank Agreements to fund the purchase price of
(i) the Shares accepted for purchase pursuant to the Offer and (ii) the Shares
converted in the Merger into the right to receive $22.50 per Share in cash,
without interest (the "Merger Consideration"), and to fund expenses relating to
the Offer and the Rights Offering. Baring Brothers Limited has agreed pursuant
to an underwriting agreement with Parent dated August 15, 1995, to underwrite
19,379,316 New Shares to be offered pursuant to the Rights Offering and Minorco
has agreed pursuant to a separate agreement to underwrite 4,731,302 New Shares,
being the provisional allotments of Tygon and Jaguar. See Section 9.
18
<PAGE>
THE OFFER CONSTITUTES NEITHER AN OFFER TO SELL, NOR A SOLICITATION OF AN
OFFER TO PURCHASE, ANY NEW SHARES, ANY RIGHTS OR ANY OTHER SECURITIES OF
PARENT. The New Shares issuable upon exercise of the Rights have not been and
will not be registered under the Securities Act or any state securities law.
Accordingly, the New Shares will not be offered, sold or delivered, directly or
indirectly, in the United States or to United States persons (residents or
citizens of the United States) or persons with registered addresses in the
United States as part of the distribution of the New Shares, except pursuant to
exemptions from the registration requirements of the Securities Act and from
other applicable laws.
11.BACKGROUND OF THE OFFER
Approximately one year ago, a number of common customers of Parent and the
Company suggested that Parent contact Acsist, which was then an independent
company, to explore Parent's desire to form a joint venture with or otherwise
invest in a company with expertise in manufacturing semiconductor packages
using organic materials. In connection with their initial discussions at that
time, Parent (through JMI) and Acsist entered into a Confidentiality Agreement
dated as of August 1, 1994 (as amended with the Company on June 28, 1995, the
"Confidentiality Agreement"). Beginning in January 1995 (after the Company's
acquisition of Acsist in December 1994), Geoffrey Wild, President and Division
Director of Parent's Materials Technology Division (Electronics), and other
representatives of Parent had several phone conversations and met several times
with Robert Heller, the President and Chief Executive Officer and a director of
the Company, and certain other executive officers of the Company to discuss the
possibility of a partnership between Parent and Acsist and generally to
exchange information about technological and marketing matters and the
respective operating philosophies of Parent and the Company.
During June 1995, Parent determined that the acquisition of 100% ownership of
the Company would be preferable to any form of joint venture with or equity
investment in Acsist. In a telephone call at that time between Mr. Heller and
Mr. Wild, Mr. Heller acknowledged Parent's interest in acquiring the Company
but stated that he thought the Company's value might be greater than any bid
Parent might make. He suggested, as an alternative to an acquisition of the
entire Company, that Parent consider a substantial equity investment in Acsist.
In a telephone call several days later, Parent indicated that it remained
interested in all acquisition options.
At the end of June, as noted above, the Confidentiality Agreement was amended
to cover the Company, in addition to Acsist. On June 29, 1995, David W. Morgan,
the Finance Director of Parent's Materials Technology Division and the Planning
Director of Parent's Cookson Matthey Ceramics plc joint venture with Cookson
Group plc, and Mr. Wild met in Minnetonka, Minnesota with Mr. Heller, Thomas I.
Mueller, the Executive Vice President, Secretary and Treasurer of the Company,
Thomas F. Leahy, a director of the Company, and David C. Malmberg, a director
of the Company, and reiterated Parent's interest in acquiring the Company. The
Company's representatives indicated that the Company would be prepared to
discuss an acquisition of the Company by Parent, subject to agreement on
important terms, including price. At the meeting it was determined that Parent
would be permitted to conduct a limited "due diligence" review of the Company.
Parent began its due diligence review of the Company in early July. On July
5, 1995, the Company informed Parent about the DCIS Investigation. On July 6-7,
representatives of Parent and its outside auditors met in Minneapolis with
representatives of the Company to conduct limited diligence activities and
Parent's legal advisors discussed the DCIS Investigation with the Company's
legal advisors. During the next few weeks, Parent and the Company continued to
discuss generally the possibility of the proposed acquisition in light of the
DCIS Investigation, but the Company significantly limited Parent's access to
confidential documents, agreements and other Company information until Parent
assessed the significance of the DCIS Investigation and otherwise evaluated the
Company. On July 28, 1995, Parent and the Company entered into a Common
Interest/Joint Defense Agreement which allowed Parent to conduct certain
additional due diligence inquiries into the DCIS Investigation. At an August 7,
1995, meeting of Parent's Board of Directors,
19
<PAGE>
after discussing, among other issues relevant to an acquisition of the Company,
the financial and business advantages and disadvantages to Parent of such
acquisition and the status of the DCIS Investigation, Parent's Board authorized
Messrs. Morgan and Wild to commence negotiations with the Company concerning
the acquisition of the Company by Parent, subject to the completion of Parent's
due diligence review and the negotiation of satisfactory terms (including
price).
During the week of August 7, 1995, business, financial, legal and technical
representatives of Parent conducted a due diligence review of the Company,
including visits to the Company's principal manufacturing facilities. In
addition, during this time, representatives of Parent and the Company began
preliminary discussions regarding a merger agreement. On August 11, 1995,
pursuant to the Confidentiality Agreement, the Company provided Parent with
certain non-public information, including an estimate of results for the
Company's fiscal year ending August 26, 1995, and a budget for the year ending
August 31, 1996. See Section 8.
On August 12, 1995, Messrs. Morgan and Wild and other representatives of
Parent, including its legal and financial advisors, met in Minneapolis with
Messrs. Heller and Mueller and other representatives of the Company, including
its legal and financial advisors, to negotiate a merger agreement. On that day,
Parent was advised that the Company's Board of Directors would be meeting the
following day to consider the status of the negotiations. Later that day,
representatives of Parent communicated to Mr. Heller an oral proposal (the
"August 12 Offer") pursuant to which all Shares would be acquired at a price of
$21.50 per Share, provided that the August 12 Offer was subject, among other
things, to the Company's agreement to reimburse up to $4 million of Parent's
expenses in the event of termination of the merger agreement in certain
circumstances and to pay an additional $3.5 million fee to Parent under certain
of those circumstances.
On August 13, 1995, representatives of the Company advised representatives of
Parent that the Company's Board of Directors had not accepted the August 12
Offer. During the course of that day and during the morning of August 14,
representatives of Parent and the Company continued to negotiate the non-price
terms of a merger agreement. During the afternoon of August 14, Mr. Morgan
telephoned Mr. Heller and indicated that Parent would be willing to acquire the
Company at a price of $22.50 per Share (the "August 14 Offer"), subject, among
other things, to the Company's agreement to reimburse up to $3 million of
Parent's expenses in the event of termination of the merger agreement in
certain circumstances and to pay an additional $2 million fee to Parent under
certain of those circumstances.
The Company has advised Parent that later that afternoon, the special
committee of the Company's Board of Directors, consisting of Messrs. Malmberg,
Stephen G. Shank and William J. Cadogan (comprising all the Company's
"disinterested" directors under applicable Minnesota law) held a meeting at
which all members of such committee were in attendance as well as the Company's
legal counsel and Alex Brown. Alex Brown delivered its written opinion that the
Offer Price of $22.50 per Share was fair to the shareholders of the Company
from a financial point of view. Immediately after such meeting, the Company's
Board of Directors held a meeting at which all the directors were present, as
well as the Company's legal counsel and Alex Brown. The Board was advised that
the Special Committee unanimously approved the August 14 Offer as fair to the
shareholders of the Company and recommended that the Board approve such offer.
A representative of Alex Brown then outlined for the Company's Board of
Directors Alex Brown's valuation analysis and the methodology employed by Alex
Brown in its analysis.
Acting upon the unanimous recommendation of the special committee, the
Company's Board of Directors then unanimously adopted resolutions approving the
Offer, the Merger and the Merger Agreement, determining that the terms of the
Offer and Merger are fair to, and in the best interests of, the Company and its
shareholders and recommending, subject to the terms and conditions set forth in
the Merger Agreement, that the Company's shareholders accept the Offer.
During the evening of August 14, 1995, Parent, the Purchaser and the Company
entered into the Merger Agreement. See Section 12 for a description of the
Merger Agreement. Prior to the opening of business on
20
<PAGE>
August 15, 1995, Parent and the Company issued a joint press release announcing
the Merger and that the Purchaser would commence the Offer shortly.
12.PURPOSE OF THE OFFER; MERGER AGREEMENT
PURPOSE OF THE OFFER. The purpose of the Offer is to acquire as many
outstanding Shares as possible as a step in acquiring the entire equity
interest in the Company. Following the Offer, the Purchaser and Parent intend,
subject to the conditions set forth in the Merger Agreement, to acquire the
remaining equity interest in the Company by consummating the Merger. Upon
consummation of the Merger, Parent intends to utilize the Company's expertise
in the production of multilayer printed circuit boards and Acsist's laminate
packaging technology, in conjunction with Parent's existing customer
relationships and advanced materials technology, to seek a leading position in
the emerging market for laminate packaging technology as well as expand the
laminate package product to multichip laminate-based modules and "chip on
board" applications.
MERGER AGREEMENT. The following description of the Merger Agreement is merely
a summary and is qualified in its entirety by reference to the entire Merger
Agreement, a copy of which is attached as an exhibit to the Tender Offer
Statement on Schedule 14D-1 filed with the Commission by the Purchaser and
Parent with respect to the Offer.
The Merger Agreement provides that, at the effective time of the Merger, the
Purchaser will be merged with and into the Company, and each then outstanding
Share (other than Shares owned by the Company, any subsidiary of the Company,
Parent, the Purchaser or any other subsidiary of Parent or that are subject to
dissenters' rights) will be converted into the right to receive $22.50 per
Share in cash, without interest.
Pursuant to the Merger Agreement, the Company has agreed that, among other
things, during the period from the date of the Merger Agreement until the
effective time of the Merger, except as expressly contemplated by the Merger
Agreement or to the extent that the Purchaser shall otherwise agree in writing,
it will and will cause each of its subsidiaries to (i) conduct its operations
only in the ordinary and usual course of business consistent with past
practice, (ii) not amend its Articles of Incorporation or By-laws, (iii) not
issue, reissue, sell or pledge, or authorize or propose the issuance,
reissuance, sale or pledge of any of its capital stock of any class, or
securities convertible or exchangeable into capital stock of any class or any
rights, warrants or options to acquire any convertible or exchangeable
securities or capital stock (other than the issuance of Shares upon the
exercise of warrants and employee stock options outstanding on the date of the
Merger Agreement), (iv) not declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination
thereof) in respect of any class or series of its capital stock or otherwise
make any payments to its shareholders in their capacity as such (except for
dividends from wholly owned subsidiaries of the Company to the Company or to
other wholly owned subsidiaries of the Company), (v) not adjust, split,
combine, subdivide, reclassify or redeem, purchase or otherwise acquire, or
propose to redeem or purchase or otherwise acquire, any shares of its capital
stock, (vi) not incur or assume any long-term debt or any short-term debt or
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any person, except
in the ordinary course of business consistent with past practice and in an
aggregate amount not to exceed $500,000, (vii) not make any loans, advances
(excluding the sale of products to customers in the ordinary course) or capital
contributions to, or investments in, any person except in the ordinary course
of business consistent with past practice and in an aggregate amount not to
exceed $500,000 for any single borrower, (viii) not settle or compromise any
suit, proceeding or claim or threatened suit, proceeding or claim, (ix) except
for increases in salary, wages and benefits of employees of the Company or its
subsidiaries (other than executive officers of the Company) in accordance with
past practice, not increase the compensation or fringe benefits payable or to
become payable to its directors, officers or employees or pay any benefit not
required by any existing plan or arrangement or grant any severance or
termination pay to (except pursuant to existing agreements or
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policies), or enter into any employment or severance agreement with, any
director, officer or employee of the Company or any of its subsidiaries or
establish, adopt, enter into, terminate or amend any collective bargaining or
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees,
except to the extent such termination or amendment is required by applicable
law, (x) not acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets, other than transactions that are in the ordinary course of business and
not material to the Company or any of its subsidiaries, (xi) not sell, lease,
mortgage or otherwise encumber or dispose of or agree to sell, lease, mortgage
or otherwise encumber or dispose of, any of its assets, other than transactions
that are in the ordinary course of business and not material to the Company or
any of its subsidiaries, (xii) not modify, amend or terminate any contract or
prepay any indebtedness of the Company or forgive any indebtedness owed to the
Company, other than in the ordinary course of business consistent with past
practice and which is not material to the business of the Company and its
subsidiaries and (xiii) not take any action that would or might result in any
of the representations of the Company set forth in the Merger Agreement
becoming untrue.
The Company also agreed not to solicit, initiate, or encourage the submission
of, any takeover proposal (as defined below), enter into any agreement with
respect to any takeover proposal or participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
takeover proposal; provided, however, that prior to the acceptance for payment
of Shares pursuant to the Offer, to the extent required by the fiduciary
obligations of the Board of Directors of the Company, as determined in good
faith by a majority of the disinterested members thereof based on the written
advice of outside counsel (a copy of which written advice shall be promptly
furnished to Parent), the Company may, in response to unsolicited requests
therefor, participate in discussions or negotiations with, or furnish
information pursuant to an appropriate confidentiality agreement to, any
person. "Takeover proposal" means any proposal, other than a proposal by Parent
or any of its affiliates, for a merger, consolidation, share exchange, business
combination or other similar transaction involving the Company or any of its
subsidiaries or any proposal or offer (including, without limitation, any
proposal or offer to shareholders of the Company), other than a proposal or
offer by Parent or any of its affiliates, to acquire in any manner, directly or
indirectly, an equity interest in the Company or any of its subsidiaries, any
voting securities of the Company or any of its subsidiaries or a substantial
portion of the assets of the Company or any of its subsidiaries. The Board of
Directors of the Company, to the extent required by the fiduciary obligations
thereof, as determined in good faith by a majority of the disinterested members
thereof based on the written advice of outside counsel (a copy of which written
advice shall be promptly furnished to Parent), may approve or recommend (and,
in connection therewith, withdraw or modify its approval or recommendation of
the Offer, the Merger Agreement or the Merger) a superior proposal (as defined
below). "Superior proposal" means a bona fide proposal made by a third party to
acquire the Company pursuant to a tender or exchange offer, a merger, a
statutory share exchange, a sale of all or substantially all its assets or
otherwise on terms which a majority of the disinterested members of the Board
of Directors of the Company determines in its good faith reasonable judgment
(based on the advice of independent financial advisors) to be more favorable to
the Company and its shareholders than the Offer and Merger and for which
financing, to the extent required, is then fully committed or (based on the
advice of independent financial advisors) is likely to be obtained in a timely
manner.
The Merger Agreement further provides that the Company will use its best
efforts to cause the holders of all outstanding warrants and employee stock
options to purchase Shares to agree in writing that such warrants and options
shall be surrendered and cancelled in exchange for cash payments by the Company
on the date of closing of the Offer to the holders of such warrants or options
in an amount not in excess of the difference between the price paid for each
Share pursuant to the Merger and the per Share exercise price of such warrants
or options, multiplied by the number of Shares subject to such warrants or
options.
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Parent presently intends to provide, for a period of one year following the
effective time of the Merger, employees of the Company with employee benefits
that are in the aggregate not materially less favorable to such employees than
those presently provided under the Company's current benefit plans. Parent has
agreed to cause to be maintained for a period of not less than three years from
the effective time of the Merger the policies of the directors and officers'
liability and fiduciary insurance most recently maintained by the Company;
provided that there may be substituted therefor policies of at least the same
coverage containing terms and conditions no less advantageous to the
beneficiaries thereof so long as such substitution does not result in gaps or
lapses in coverage with respect to matters occurring prior to the effective
time to the extent available and provided further that Parent has no obligation
to provide such policies to the extent that the cost of maintaining such
policies would be substantially higher than the current cost to the Company. In
addition, Parent has agreed, for six years after the Merger, to cause the
surviving corporation in the Merger to indemnify and hold harmless all officers
and directors of the Company to the same extent such persons are currently
indemnified by the Company pursuant to the Company's Articles of Incorporation
and By-laws for acts or omissions occurring at or prior to the effective time
of the Merger.
The Merger is subject to approval by the holders of a majority of the
outstanding Shares. The Purchaser intends to vote or to give written consent
with respect to all Shares acquired by it in the Offer or otherwise in favor of
the Merger. Accordingly, if the Purchaser purchases a majority of the
outstanding Shares pursuant to the Offer, the Purchaser will be able to effect
the Merger without the affirmative vote of any other holder of Shares.
Furthermore, if the Purchaser acquires at least 90% of the outstanding Shares
pursuant to the Offer, the Purchaser would, under Minnesota law, be able to
effect the Merger without any prior notice to, or vote by, the Company's
shareholders.
The Merger is also subject to the satisfaction of certain conditions,
including (a) the acceptance for purchase and payment for Shares by the
Purchaser pursuant to the Offer; (b) the receipt of all authorizations,
consents, orders or approvals of, the filing of all declarations with, and the
expiration of all waiting periods imposed by, all courts, arbitral tribunals,
administrative agencies or commissions or other governmental or regulatory
authorities or agencies, domestic or foreign ("Governmental Entities"),
necessary for the consummation of the transactions contemplated by the Merger
Agreement; (c) the absence of any temporary restraining order, preliminary or
permanent injunction or other order of any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the Merger;
and (d) the absence of any pending or threatened action, suit or proceeding
(other than the DCIS Investigation) by any Governmental Entity before any court
or governmental or regulatory authority against the Company, Parent or the
Purchaser or any of their subsidiaries challenging the validity or legality of
the transactions contemplated by the Merger Agreement. In addition, the
obligations of Parent and the Purchaser to effect the Merger are subject to
certain additional conditions, including (a) the performance in all material
respects by the Company of its agreements under the Merger Agreement and the
accuracy in all material respects of the representations and warranties of the
Company set forth in the Merger Agreement; (b) the receipt of all required
authorizations, consents or approvals, the failure to obtain which would have a
material adverse effect on Parent and its subsidiaries or the Company and its
subsidiaries; and (c) the absence of, after August 14, 1995, in the reasonable
judgment of Parent, any change or development or prospective change or
development in the DCIS Investigation or the circumstances surrounding the DCIS
Investigation that could reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as a whole. The Merger
Agreement states that, for greater certainty, such a change or development is
deemed to include, without limitation, the following: (i) any proceeding
commenced by any Governmental Entity for the suspension or debarment of the
Company or any of its subsidiaries from doing business with the United States
(or any agency or instrumentality thereof); (ii) any withdrawal of any
governmental approval of the quality control or quality assurance systems of
the Company or any of its subsidiaries or any removal of the Company or any of
its subsidiaries from any governmental "qualified products list"; (iii) any
notification of the Company or any of its subsidiaries that any of them is a
target or subject of a criminal investigation; (iv) any indictment of the
Company or of any of its subsidiaries or of any of their respective directors
or officers; (v) the discovery of substantial evidence that any member of the
senior management of the Company was involved personally in material misconduct
or that there exist defects in the products of the Company or
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of any of its subsidiaries, which defects are in excess of historical levels
and, in the aggregate (and after consideration of remedies reasonably available
to the United States in connection therewith), are reasonably likely to have a
material adverse effect on the Company; or (vi) any civil action, suit or
proceeding commenced by any Governmental Entity seeking legal or equitable
relief. The obligations of the Company to effect the Merger are subject to the
accuracy in all material respects of the representations and warranties made by
Parent and the Purchaser in the Merger Agreement and the performance in all
material respects of the agreements made by Parent and the Purchaser in the
Merger Agreement. As used in the Merger Agreement, any reference to any event,
change or effect being "material" or having a "material adverse effect" on or
with respect to an entity means such event, change or effect which is or is
reasonably likely to be materially adverse to the business, properties, results
of operations or financial condition of such entity and its subsidiaries taken
as a whole.
The Merger Agreement may be terminated at any time prior to the effective
time of the Merger, whether before or after approval by the shareholders of the
Company, (a) by mutual consent of Parent, the Purchaser and the Company, (b) by
either Parent or the Company if: (i) any required approval of the shareholders
of the Company shall not have been obtained at any duly held meeting of such
shareholders; (ii) (x) as the result of the failure of any of the conditions
set forth in Section 14 of this Offer to Purchase, the Offer shall have
terminated or expired in accordance with its terms without the Purchaser having
purchased any Shares pursuant to the Offer or (y) subject to certain
exceptions, the Purchaser shall not have purchased any Shares pursuant to the
Offer within 90 days following the date of the Merger Agreement; (iii) subject
to certain exceptions, the Merger shall not have been consummated before May
14, 1996; or (iv) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the purchase of Shares pursuant to the
Offer or the Merger and such order, decree, ruling or other action shall have
become final and nonappealable; (c) by the Company if (i) to the extent
permitted, as described above, the Board of Directors of the Company approves
or recommends a superior proposal and (ii) the Company has paid to Parent an
amount in cash equal to the sum of the "Termination Fee" plus all "Expenses",
each as defined below; or (d) by Parent if Parent or the Purchaser shall have
received notice under (x) the Exon-Florio Amendment that the Committee on
Foreign Investment in the United States has determined to investigate the
Merger, any related transaction or Parent or the Purchaser or (y) the HSR Act
that the Federal Trade Commission or the Antitrust Division of the Department
of Justice has requested additional information concerning the Offer, the
Merger, any related transaction or Parent or the Purchaser, extending the
applicable waiting period under the HSR Act.
A "Termination Fee" will be payable by the Company to Parent upon termination
of the Merger Agreement in the following circumstances: (i) the Board of
Directors of the Company withdraws its recommendation of the Offer or
recommends another offer, in which case the Company will be obligated to pay a
fee of $2 million and reimburse Parent for its expenses (including underwriting
fees in connection with the Rights Offering) up to $3 million ("Expenses"), for
a total of up to $5 million; (ii) the Company materially breaches its covenants
in the Merger Agreement, in which case the fee will be $2 million plus Expenses
for a total of up to $5 million; (iii) the Company materially breaches its
representations in the Merger Agreement, both at signing and upon termination
of the Merger Agreement, in which case the fee will be $2 million plus Expenses
for a total of up to $5 million; (iv) there has been a material adverse change
or development in the DCIS Investigation and senior management of the Company
was personally involved in material misconduct, in which case the fee will be
$2 million plus Expenses, for a total of $5 million; (v) the Company's
representations in the Merger Agreement were true at signing of the Merger
Agreement, but become untrue in any material respect thereafter, in which case
the Company will be obligated to reimburse Parent's Expenses up to $3 million;
or (vi) there has been a material adverse change or development in the DCIS
Investigation and there are discovered defects in the Company's products that
are in excess of historical levels and, in the aggregate (and after
consideration of remedies reasonably available to the United States in
connection therewith), are reasonably likely to have a material adverse effect
on the Company, in which case Parent's Expenses will be reimbursed up to $3
million.
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In connection with the Merger Agreement, each of the following directors of
the Company has submitted his written resignation, conditioned on and effective
as of the payment for Shares purchased in the Offer: Thomas F. Leahy; David C.
Malmberg; Stephen G. Shank; and William J. Cadogan. The Board of Directors of
the Company has appointed as directors of the Company, conditioned on and
effective as of such payment, the following representatives of Parent: Geoff
Wild; Donald J. Miller; and D. McL. Miller. Accordingly, upon such payment, a
majority of the Board of Directors of the Company will be representatives of
Parent.
The Company's President and Chief Executive Officer, Robert W. Heller, has
indicated that he intends to remain employed by the Company for a period of at
least two years after the closing of the Offer. Parent, however, has not
offered or requested an employment agreement with Mr. Heller and has not
specified what his responsibilities will be.
No dissenters' rights are available to holders of Shares in connection with
the Offer. However, if the Merger is consummated, holders of Shares which have
not been tendered in the Offer will have certain rights under Sections 302A.471
and 302A.473 of the Minnesota Business Corporation Act ("MBCA") to dissent and
demand payment in cash of the fair value of their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value required to be paid in cash to such dissenting holders for
their Shares. In making any such judicial determination of the fair value, the
court may take into account all factors the court finds relevant, computed by
any method or combination of methods that the court, in its discretion, sees
fit to use. The value so determined could be less than, equal to or greater
than the Offer Price or the Merger Consideration.
The Merger will have to comply with any applicable Federal law. In
particular, unless registration of the Shares under the Exchange Act is
terminated prior to such transaction, if the Purchaser acquires Shares pursuant
to the Offer and a business combination with the Company is consummated more
than one year after termination of the Offer or does not provide for
shareholders to receive cash for their Shares in an amount at least equal to
the price per Share paid pursuant to the Offer, the Purchaser may be required
to comply with Rule 13e-3 promulgated by the Commission under the Exchange Act.
If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating
to the fairness of such business combination and the consideration offered to
minority shareholders be filed with the Commission and distributed to minority
shareholders prior to the consummation of any such transaction.
If for any reason the Merger is not consummated, Parent and the Purchaser
will evaluate their other alternatives. Such alternatives could include
purchasing additional Shares in the open market, in privately negotiated
transactions, in another tender or exchange offer or otherwise, or taking no
further action to acquire additional Shares. Any additional purchases of Shares
could be at a price greater or less than the price to be paid for Shares in the
Offer and could be for cash or other consideration. Alternatively, the
Purchaser may sell or otherwise dispose of any or all Shares acquired pursuant
to the Offer or otherwise. Such transactions may be effected on terms and at
prices then determined by Parent or the Purchaser, which may vary from the
price paid for Shares in the Offer.
Except as described above, the Purchaser and Parent have no present plans or
proposals that would relate to or result in any extraordinary corporate
transaction prior to the effectiveness of the Merger, such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries,
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's Board of Directors or management, any
material change in the Company's capitalization or dividend policy or any other
material change in the Company's corporate structure or business.
13.DIVIDENDS AND DISTRIBUTIONS
If on or after August 14, 1995, the Company should (i) split, combine or
otherwise change the Shares or its capitalization, (ii) acquire or otherwise
cause a reduction in the number of outstanding Shares or other securities or
(iii) issue or sell additional Shares, shares of any other class of capital
stock, other voting securities or any securities convertible into, or rights,
warrants or options, conditional or otherwise, to
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acquire, any of the foregoing, then, subject to the provisions of Section 1,
the Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
If, on or after August 14, 1995, the Company should declare or pay any cash
dividend on the Shares or other distribution on the Shares, or issue with
respect to the Shares any additional Shares, shares of any other class of
capital stock, other voting securities or any securities convertible into, or
rights, warrants or options, conditional or otherwise, to acquire, any of the
foregoing, payable or distributable to shareholders of record on a date prior
to the transfer of the Shares purchased pursuant to the Offer to the Purchaser
or its nominee or transferee on the Company's stock transfer records, then,
subject to the provisions of Section 1, (i) the Offer Price may, in the sole
discretion of the Purchaser, be reduced by the amount of any such cash dividend
or cash distribution and (ii) the whole of any such noncash dividend,
distribution or issuance to be received by the tendering shareholders will (a)
be received and held by the tendering shareholders for the account of the
Purchaser and will be required to be promptly remitted and transferred by each
tendering shareholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer, or (b) at the direction
of the Purchaser, be exercised for the benefit of the Purchaser, in which case
the proceeds of such exercise will promptly be remitted to the Purchaser.
Pending such remittance and subject to applicable law, the Purchaser will be
entitled to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
The Company is prohibited from declaring or paying any dividends or making
any other distribution on or with respect to the Shares without Parent's
consent.
14.CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, and in addition to the
conditions that (i) the Minimum Tender Condition is satisfied, (ii) the
Committee on Foreign Investment in the United States ("CFIUS") shall have
determined not to investigate the transactions contemplated by the Offer and
the Merger under Section 721 of Title VII of the Defense Production Act of
1950, as amended (the "Exon-Florio Amendment"), (iii) all applicable waiting
periods under the HSR Act shall have expired or been terminated and (iv) the
Offer shall be effective under the Minnesota Statute (as defined in Section 15)
and no Governmental Entity shall have claimed or ruled the provisions of
Sections 302.671 and 302.673 of the MBCA to be applicable to the Merger
Agreement, the Offer or the Merger, the Purchaser will not be required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to a
bidder's obligation to pay for or return tendered securities promptly after the
termination or withdrawal of each bidder's offer), to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer as provided in Section 1, if, at any time on or after August 14, 1995,
and before the acceptance of such Shares for payment or the payment therefor,
any of the following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding or application by any Governmental Entity, or by any other
person, domestic or foreign, before any court or Governmental Entity
(which, if brought by such other person, has a reasonable likelihood of
success), (i)(A) challenging or seeking to, or which is reasonably likely
to, make illegal, delay or otherwise directly or indirectly restrain or
prohibit, or seeking to, or which is reasonably likely to, impose voting,
procedural, price or other requirements, in addition to those required by
Federal securities laws and the MBCA, each as in effect on the date hereof,
in connection with the making of the Offer, the acceptance for payment of,
or payment for, some of or all the Shares by Parent, the Purchaser or any
other affiliate of Parent or the consummation by Parent, the Purchaser or
any other affiliate of Parent of the Merger, (B) seeking to obtain material
damages or otherwise directly or indirectly relating to the transactions
contemplated by the Offer or the Merger, (ii) seeking to prohibit the
ownership or operation by Parent, the Purchaser or any other affiliate of
Parent of all or any portion of the business or assets of the Company and
its
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subsidiaries or of Parent, the Purchaser or any other affiliate of Parent
or to compel Parent, the Purchaser or any other affiliate of Parent to
dispose of or hold separate all or any portion of the business or assets of
the Company or any of its subsidiaries or of Parent, the Purchaser or any
other affiliate of Parent or seeking to impose any limitation on the
ability of Parent, the Purchaser or any other affiliate of Parent to
conduct such business or own such assets, (iii) seeking to impose or
confirm limitations on the ability of Parent, the Purchaser or any other
affiliate of Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote any Shares
acquired or owned by Parent, the Purchaser or any other affiliate of Parent
on all matters properly presented to the Company's shareholders, (iv)
seeking to require divestiture by Parent, the Purchaser or any other
affiliate of Parent of any Shares or (v) otherwise directly or indirectly
relating to the Offer or the documents (including this Offer to Purchase)
pursuant to which the Offer is made or which otherwise, in the sole good
faith judgment of the Purchaser, is reasonably likely to materially
adversely affect the Company or any of its subsidiaries or Parent, the
Purchaser or any other affiliate of Parent or the value of the Shares;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, (i) Parent, the Purchaser or any other affiliate
of Parent or the Company or any of its subsidiaries or (ii) the Offer or
the Merger by any government, legislative body or court, domestic, foreign
or supranational, or Governmental Entity, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any change, condition, event or development
that is reasonably likely to result in a material adverse effect on the
Company (as defined in Section 12);
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or on The International Stock Exchange of the United Kingdom
and the Republic of Ireland Limited, (ii) any extraordinary or material
adverse change in the financial markets or major stock exchange indices in
the United States or abroad, (iii) any change in the general political,
market, economic or financial conditions in the United States or United
Kingdom that is reasonably likely to have a material adverse effect upon
the Company or Parent or the trading in, or value of, the Shares, (iv) any
material change in United States or the United Kingdom currency exchange
rates or a suspension of, or limitation on, the markets therefor, (v) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or in the United Kingdom, (vi) any
limitation (whether or not mandatory) by any government, domestic, foreign
or supranational, or Governmental Entity on, or other event that is
reasonably likely to affect, the extension of credit by banks or other
lending institutions in the United States or the United Kingdom, (vii) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or the United Kingdom or (viii) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(e) any material approval, permit, authorization, favorable review or
consent of any Governmental Entity required in connection with the Offer
shall not have been obtained on terms satisfactory to the Purchaser;
(f) (i) it shall have been publicly disclosed or Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25% of the outstanding Shares has been acquired by
another person, entity or "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) or (ii) (x) the Board of Directors of the Company or
any committee thereof shall have withdrawn or modified in a manner adverse
to Parent or the Purchaser its approval or recommendation of the Offer, the
Merger or the Merger Agreement, or approved or recommended any takeover
proposal, (y) the Company shall have entered into any agreement with
respect to any takeover proposal or (z) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing;
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(g) there shall have been, in the reasonable judgment of Parent, any
change or development or prospective change or development in the DCIS
Investigation or the circumstances surrounding the DCIS Investigation that
could reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, taken as a whole. For greater certainty, such
a change or development shall be deemed to include, without limitation, the
following: (i) any proceeding commenced by any Governmental Entity for the
suspension or debarment of the Company or any of its subsidiaries from
doing business with the United States (or any agency or instrumentality
thereof); (ii) any withdrawal of any governmental approval of the quality
control or quality assurance systems of the Company or any of its
subsidiaries or any removal of the Company or any of its subsidiaries from
any governmental "qualified products list"; (iii) any notification of the
Company or any of its subsidiaries that any of them is a target or subject
of a criminal investigation; (iv) any indictment of the Company or any of
its subsidiaries or of any of their respective directors or officers; (v)
the discovery of substantial evidence that any member of the senior
management of the Company was involved personally in material misconduct or
that there exist defects in the products of the Company or any of its
subsidiaries, which defects are in excess of historical levels and, in the
aggregate (and after consideration of remedies reasonably available to the
United States in connection therewith), are reasonably likely to have a
material adverse effect on the Company; or (vi) any civil action, suit or
proceeding commenced by any Governmental Entity seeking legal or equitable
relief;
(h) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality shall not be true
and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time;
(i) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement; or
(j) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been amended or terminated with the
consent of the Company;
which, in the good faith judgment of the Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
any of its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and Parent
and may be asserted by the Purchaser regardless of the circumstances giving
rise to any such condition or may be waived by the Purchaser in whole or in
part at any time and from time to time in its sole discretion. The failure by
the Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances will not be deemed a waiver with respect to
any other facts and circumstances and each such right will be deemed an ongoing
right that may be asserted at any time and from time to time. Any good faith
determination by the Purchaser concerning the events described in this Section
14 will be final and binding upon all parties.
For purposes of the Minimum Tender Condition, "Fully Diluted Shares" means
all outstanding securities entitled generally to vote in the election of
directors of the Company on a fully diluted basis, after giving effect to the
exercise or conversion of all options, rights and securities exercisable or
convertible into such voting securities.
15.CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on information provided by the
Company, neither the Purchaser nor Parent is 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
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
the Company's subsidiaries) as contemplated
28
<PAGE>
herein or of any approval or other action by any governmental, administrative
or regulatory agency or authority that would be required or desirable for the
acquisition or ownership of Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, Parent and
the Purchaser currently contemplate that such approval or other action will be
sought, except as described below under "State Takeover Laws". While the
Purchaser does not presently intend to delay the acceptance for payment of or
payment for 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 or would be obtained without substantial
conditions or that failure to obtain any such approval or other action might
not result in consequences adverse to the Company's business or that certain
parts of the Company's business might not have to be disposed of if such
approvals were not obtained or such other actions were not taken or in order to
obtain any such approval or other action. If certain types of adverse action
are taken with respect to the matters discussed below, the Purchaser could
decline to accept for payment or pay for any Shares tendered. See Section 14
for certain conditions to the Offer.
STATE TAKEOVER LAWS. 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, shareholders, executive offices or places of business in such states.
In Edgar v. MITE Corp., 457 U.S. 624 (1982), the Supreme Court of the United
States held that the Illinois Business Takeover Act, which involved state
securities laws that made the takeover of certain corporations more difficult,
imposed a substantial burden on interstate commerce and therefore was
unconstitutional. In CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69
(1987), however, the Supreme Court of the United States held that a state may,
as a matter of corporate law and, in particular, those laws concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without prior approval of the
remaining shareholders, provided that such laws were applicable only under
certain conditions. Subsequently, a number of Federal courts ruled that various
state takeover statutes were unconstitutional insofar as they apply to
corporations incorporated outside the state of enactment.
Except as described herein, neither Parent nor the Purchaser has attempted to
comply with any state takeover statues in connection with the Offer. The
Purchaser reserves the right to challenge the validity or applicability of any
state law allegedly applicable to the Offer and nothing in this Offer to
Purchase nor any action taken in connection herewith is intended as a waiver of
that right. In the event that any state takeover statute is found applicable to
the Offer, the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for payment or pay for any Shares tendered. See Section 14.
MINNESOTA TAKEOVER DISCLOSURE LAW. The Minnesota Takeover Disclosure Law,
Minnesota Statutes Chapter 80B.01-80B.13 (the "Minnesota Statute"), by its
terms requires certain disclosures and the filing of certain disclosure
material with the Minnesota Commissioner of Commerce (the "Commissioner") with
respect to any offer for a corporation, such as the Company, that has its
principal place of business in Minnesota and a certain number of shareholders
resident in Minnesota. The Purchaser will file disclosure material with the
Commissioner on August 21, 1995. Although the Commissioner does not approve
such material, he does review it for the adequacy of such disclosure and is
empowered to suspend summarily the Offer in Minnesota within three days of such
filing if he determines that the material does not (or the materials provided
beneficial owners of the Shares residing in Minnesota do not) provide full
disclosure. If such summary suspension occurs, a hearing must be held (within
10 days of the summary suspension) and a determination made (within three days
of the completion of such hearing, but not more than 16 days after the initial
summary suspension) as to whether to suspend permanently the Offer in
Minnesota, subject to corrective disclosure. If the Commissioner takes action
under the Minnesota Statute, then the Purchaser may not be obligated to accept
for payment or pay for Shares tendered pursuant to the Offer because such
action may have the effect of significantly delaying the Offer. See Sections 12
and 14 for certain conditions to the Offer and Merger, including conditions
with respect to governmental actions. In such event, the Purchaser may, among
other things, terminate the Offer or amend the terms and conditions of the
Offer.
29
<PAGE>
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent
of a Notification and Report Form with respect to the Offer, unless Parent
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting period
is granted. Parent made such filing on August 21, 1995. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the
waiting period will be extended and would expire at 11:59 p.m., New York City
time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to
a request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
Parent. 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 frequently 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.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, 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 purchase of Shares pursuant to
the Offer or the consummation of the Merger or seeking the divestiture of
Shares acquired by the Purchaser or the divestiture of substantial assets of
the Company or its subsidiaries or of Parent or its subsidiaries. Private
parties may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such a challenge is made, of the
result thereof.
FOREIGN LAWS. The Company has informed the Purchaser that the Company and
certain of its subsidiaries conduct business in certain foreign countries where
regulatory filings or approvals may be required in connection with the
consummation of the Offer. Certain of such filings, if required, may not be
completed and certain of such approvals, if required, may not be obtained,
prior to the expiration of the Offer. However, there is no present intention to
delay the acceptance for payment of or the payment for Shares pursuant to the
Offer pending the completion of such filings and the obtaining of such
approvals. There is no assurance that any such approvals would be obtained or
that adverse consequences to Parent's or the Company's business might not
result from a failure to obtain such approvals or conditions that might be
imposed in connection therewith.
EXON-FLORIO AMENDMENT. The Exon-Florio Amendment authorizes the President or
his designee to make an investigation to determine the effects on national
security of mergers, acquisitions and takeovers by or with foreign persons
which could result in foreign control of persons engaged in interstate commerce
in the United States. The President has delegated authority to investigate
proposed transactions to CFIUS.
The Exon-Florio Amendment establishes the following 90-day timetable: (i)
within 30 days following the receipt by CFIUS of written notification of a
proposed acquisition, CFIUS must determine whether to commence an
investigation; (ii) if an investigation is commenced, the investigation must be
completed within 45 days following the determination to commence an
investigation; and (iii) the President has 15 days following the completion of
the investigation to take any action to suspend or prohibit such acquisition.
In order for the President to exercise his authority to suspend or prohibit
an acquisition, the President must make two findings: (i) that there is
credible evidence that leads the President to believe that the foreign
interests exercising control might take action that threatens to impair the
national security and (ii) that provisions of law other than the Exon-Florio
Amendment do not provide adequate and appropriate authority for the President
to protect the national security in connection with the acquisition. Such
findings are not subject to judicial review. If the President makes such
findings, he may take such action for such time as he
30
<PAGE>
considers appropriate to suspend or prohibit the acquisition. The President may
direct the Attorney General to seek appropriate relief, including divestment
relief, in the District Courts of the United States in order to implement and
enforce the Exon-Florio Amendment.
The Exon-Florio Amendment does not obligate the parties to an acquisition to
notify CFIUS of a proposed transaction. If notice of a proposed acquisition is
not submitted to CFIUS, however, then the transaction remains indefinitely
subject to review by the President under the Exon-Florio Amendment.
On August 21, 1995, Parent and the Company filed with CFIUS a joint notice of
the transactions contemplated by the Merger Agreement.
16.FEES AND EXPENSES
Dillon, Read & Co. Inc. ("Dillon Read") and Baring Brothers Limited
(together, the "Financial Advisors") are acting as financial advisors to the
Purchaser and Parent in connection with the transactions described in this
Offer to Purchase and Dillon Read is acting as Dealer Manager for the Offer.
The Purchaser and Parent have agreed to pay the Financial Advisors for their
services (including the services of Dillon Read as Dealer Manager) in cash
(together with amounts equal to any United Kingdom value added tax and other
sales taxes arising in respect of the following fees) (i) $50,000 per month up
to a maximum of $250,000; (ii) $250,000, less any fees paid as described in
clause (i) above, payable upon commencement of the Offer; and (iii) (a) if the
Purchaser consummates the Merger before June 30, 1996, a fee equal to 1% of the
purchase price of the Company up to a maximum of $1,500,000, less any fees paid
as described in clauses (i) and (ii) above, payable upon consummation of the
Merger or (b) if the Purchaser is paid the Termination Fee by the Company
pursuant to Section 6.8 of the Merger Agreement, a fee equal to 10% of the
Termination Fee up to a maximum of $1,500,000, less any fees paid as described
in clauses (i) and (ii) above. The Financial Advisors will also be reimbursed
for their out-of-pocket expenses relating to the Offer and the Merger,
including reasonable fees and expenses of their counsel and expenses incurred
by Dillon Read as Dealer Manager. The Purchaser and Parent have agreed to
indemnify the Financial Advisors and certain related persons against certain
liabilities and expenses in connection with their services, including certain
liabilities under the Federal securities laws.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
Georgeson & Company Inc. has been retained by the Purchaser to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers, banks, trust companies and other
nominee shareholders to forward the Offer material to beneficial owners.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their services, will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
under the Federal securities laws.
17.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 laws of
such jurisdiction. Neither the Purchaser nor Parent is aware of any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class
of offerees in the Offer, the Purchaser will 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
31
<PAGE>
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 the Purchaser by the Dealer Manager or one or
more registered brokers or dealers which are licensed under the laws of such
jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the 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.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange
Act, furnishing certain additional information with respect to the Offer, and
may file amendments thereto. Among the exhibits so filed are copies of the
Parent Financial Statements referred to in Section 9 and the Merger Agreement
referred to in Section 12. In addition, the Company has filed with the
Commission a Statement on Schedule 14D-9 (including exhibits) pursuant to Rule
14d-9 under the Exchange Act. Such Statements and any amendments thereto,
including exhibits, should be obtainable in the manner set forth in Section 8
of this Offer to Purchase (except that such material will not be available at
the regional offices of the Commission).
ACI Acquisition Corporation
32
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF JOHNSON MATTHEY PUBLIC LIMITED COMPANY,
JOHNSON MATTHEY INC. AND ACI ACQUISITION CORPORATION
I. DIRECTORS AND EXECUTIVE OFFICERS OF JOHNSON MATTHEY PUBLIC LIMITED COMPANY
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
Johnson Matthey Public Limited Company are set forth below.
<TABLE>
<CAPTION>
POSITION WITH JOHNSON MATTHEY PUBLIC LIMITED
COMPANY;
NAME, AGE AND BUSINESS PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR
ADDRESS EMPLOYMENT HISTORY
---------------------- --------------------------------------------
<S> <C>
David J. Davies (55)....... Chairman and Chief Executive of Johnson Matthey
2-4 Cockspur Street Public Limited Company since March, 1994. From
Trafalgar Square January, 1990 until March, 1994, Mr. Davies was
London SW1Y 5BQ Chairman of Johnson Matthey Public Limited
Company. Mr. Davies has also been Chairman of
Sketchley PLC since 1990 and Imry Holdings Limited
since December, 1992. Mr. Davies has been a
Director of Glyndebourne Productions Limited since
1990, Irish Life Assurance PLC (Ireland) since
1991 and The Wharf (Holdings) Limited (Hong Kong)
since 1992. Mr. Davies is also Chairman of
Delaware North Companies Inc. (USA). Mr. Davies is
a citizen of the United Kingdom.
Christopher R. N. Clark
(53)...................... Managing Director, Materials Technology, of
2-4 Cockspur Street Johnson Matthey Public Limited Company since
Trafalgar Square March, 1994 and Chief Executive of Cookson Matthey
London SW1Y 5BQ Ceramics plc since April, 1994. Mr. Clark has been
an Executive Director of Johnson Matthey Public
Limited Company since March, 1990. Mr. Clark has
been a Director of Arora-Matthey Limited (India)
since March, 1992. He is also a Director of Ryoka
Matthey Corporation (Japan). Mr. Clark has been a
Non-Executive Director of Trinity Holdings plc
since October, 1992. Mr. Clark is a citizen of the
United Kingdom.
David W. Morgan (37)....... Director of Cookson Matthey Ceramics plc since
2-4 Cockspur Street July, 1994 and Finance Director of Johnson
Trafalgar Square Matthey's Materials Technology Division since
London SW1Y 5BQ December, 1991. Mr. Morgan has been a Director of
ACI Acquisition Corporation since August, 1995.
From December, 1990 until December, 1991, Mr.
Morgan was Finance Director of Johnson Matthey's
Precious Metals Division and from December, 1988
until December, 1990, he was Finance Director of
Johnson Matthey's Catalytic Systems Division. Mr.
Morgan is a citizen of the United Kingdom.
John N. Sheldrick (45)..... Executive Director, Finance and Technology, of
2-4 Cockspur Street Johnson Matthey Public Limited Company since
Trafalgar Square December, 1992. Mr. Sheldrick has been a Director
London SW1Y 5BQ of Johnson Matthey Inc. since November, 1990 and a
Director of Cookson Matthey Ceramics plc since
April, 1994. From September, 1990 to December,
1992, Mr. Sheldrick was Executive Director,
Finance, of Johnson Matthey Public Limited
Company. Mr. Sheldrick has been a Non-Executive
Director of API Group plc since January, 1995.
From June, 1986 until September, 1990, Mr.
Sheldrick was Group Treasurer of The BOC Group
plc. Mr. Sheldrick is a citizen of the United
Kingdom.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH JOHNSON MATTHEY PUBLIC LIMITED
COMPANY;
NAME, AGE AND BUSINESS PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR
ADDRESS EMPLOYMENT HISTORY
---------------------- --------------------------------------------
<S> <C>
Ian G. Thorburn (54)....... Executive Director, Administration, of Johnson
2-4 Cockspur Street Matthey Public Limited Company since May, 1987.
Trafalgar Square Mr. Thorburn has been a President of Johnson
London SW1Y 5BQ Matthey Inc. since April, 1994 and Director of
Johnson Matthey Inc. since May, 1994. He has been
a Director of Guy's Hospital Nominees Limited
since October, 1992. Mr. Thorburn is a citizen of
the United Kingdom.
Douglas G. Titcombe (52)... Managing Director, Precious Metals and Catalytic
2-4 Cockspur Street Systems, of Johnson Matthey Public Limited Company
Trafalgar Square since March, 1994, having been an Executive
London SW1Y 5BQ Director since November, 1990. From 1988 to
November, 1990, Mr. Titcombe was Director,
Precious Metals Marketing Division of Johnson
Matthey Public Limited Company. Mr. Titcombe is a
citizen of the United Kingdom.
Peter C. D. Burnell (54)... Non-Executive Director of Johnson Matthey Public
Minorco S.A. Limited Company since June, 1993. Mr. Burnell has
9 rue Sainte Zithe been an Executive Director of Minorco S.A. since
Luxembourg-Ville March, 1993. Mr. Burnell is a director of Anglo
Luxembourg American Corporation of South Africa, Anglo
American Corporation of South America, Anmercosa
Sales Limited, Beralt Tin & Wolfram (Portugal)
S.A., Brazilian Investment Trust plc, Cleveland
Potash Limited, Garrick Investments Limited,
Ivernia West plc, Latin American Investment Trust
plc, Minorco Finance (UK) Limited, Minorco Ireland
Limited, Minorco Lisheen Limited, Minorco Services
(UK) Limited, Normandy Anglo Asia and Steetley
Iberia S.A. Mr. Burnell has also been Chairman of
Newcastle University Investment Committee since
June, 1990 and Trustee of the Newcastle University
Development Fund since November, 1989. Mr. Burnell
was a Director of Charter Consolidated plc and
Medgenix S.A. until 1993 and he was also Director
of Butte Mining plc and Waverley Mining Finance
until 1992. Mr. Burnell is a citizen of the United
Kingdom.
Harry E. Fitzgibbons (58).. Non-Executive Director of Johnson Matthey Public
Top Technology Limited Limited Company since May 1990. Mr. Fitzgibbons
20-21 Tooks Court has been Managing Director of Top Technology
Cursitor Street Limited since 1986. Mr. Fitzgibbons is Director of
London EC4 The Engineering Council Award Co. since 1991,
Director of Reynolds Medical Group Limited since
1992 and Director of General Logistics plc since
1993. Mr. Fitzgibbons is Managing Director of
Hambros Advanced Technology Trust plc. Mr.
Fitzgibbons is also a Director of PYBT Development
Fund (Northern) Limited, Cambridge Quantum Fund
Limited, TTL Management Limited, Reynolds Medical
Group Limited, Restec Laboratories Limited and
Telematics International Inc. Mr. Fitzgibbons is a
citizen of the United States.
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH JOHNSON MATTHEY PUBLIC LIMITED
COMPANY;
NAME, AGE AND BUSINESS PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR
ADDRESS EMPLOYMENT HISTORY
---------------------- --------------------------------------------
<S> <C>
Henry M. P. Miles OBE (59).. Non-Executive Director of Johnson Matthey Public
Baring Holding Company Limited Company since March, 1990. Mr. Miles has
8 Bishopsgate been an Executive Director of Baring Holding
London EC2 Company since February, 1995, an Executive
Director of John Swire & Sons Limited since 1988
and a Non-Executive Director of British Petroleum
plc since May, 1994. Mr. Miles has also been
Chairman of The Fleming Chinese Investment Trust
plc since 1993. From April, 1994 until February,
1995, Mr. Miles was an Executive Director of
Barings plc and from April, 1989 until March,
1994, he was a Non-Executive Director of Barings
plc. Mr. Miles is a citizen of the United Kingdom.
Patrick F. Retief (62)...... Non-Executive Director of Johnson Matthey Public
JCI Limited Limited Company since June, 1993. Mr. Retief has
Mining Finance House been Chairman of JCI Limited, Anglo American
P.O. Box 590 Platinum Corporation Limited and Johnnies
Johannesburg 2000 Industrial Corporation Limited since July, 1990.
Republic of South Africa (In May, 1995, Johannesburg Consolidated
Investment Co. Limited was split into JCI Limited,
Anglo American Platinum Corporation Limited and
Johnnies Industrial Corporation Limited.) Mr.
Retief is Chairman of Rustenburg Platinum Mines
Limited, Times Media Limited and Beverage and
Consumer Industry Holdings Limited. Mr. Retief is
also a Non-Executive Director of Anglo American
Corporation, South African Breweries, Standard
Bank Investment Corporation and Premier Group and
a Director of Potgietersrust Platinum Limited and
Lebowa Platinum Mines Limited, all of which are
South African companies. Mr. Retief is a citizen
of the Republic of South Africa.
The Hon Geoffrey H. Wilson
(65)....................... Deputy Chairman of Johnson Matthey Public Limited
Southern Electric plc Company since March, 1994. Mr. Wilson has been
Westacott Way Chairman of Southern Electric plc since June, 1993
Littlewick Green and a Non-Executive Director of Blue Circle
Maidenhead Industries plc since June, 1980. From June, 1978
Berkshire SL6 3QB until July, 1995, Mr. Wilson was Non-Executive
Director of Drayton, English & International Trust
plc. From October, 1982 until April, 1994, he was
Chairman of Delta plc. From March, 1990 until
February, 1994, he was a Non-Executive Director of
Johnson Matthey Public Limited Company and from
November, 1989 until May, 1993, he was a Non-
Executive Director of Southern Electric plc. Mr.
Wilson is a citizen of the United Kingdom.
</TABLE>
S-3
<PAGE>
II. DIRECTORS AND EXECUTIVE OFFICERS OF JOHNSON MATTHEY INC.
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
Johnson Matthey Inc. are set forth below.
<TABLE>
<CAPTION>
POSITION WITH JOHNSON MATTHEY INC.; PRINCIPAL
NAME, AGE AND BUSINESS OCCUPATION
ADDRESS OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
---------------------- ---------------------------------------------
<S> <C>
Kenneth E. Arnold (45)..... Vice President of Johnson Matthey Inc. since
456 Devon Park Drive October, 1988. Mr. Arnold has been Division
Wayne, PA 19087 President and Division Director, Catalytic
Systems, since October, 1991 and a Director since
November, 1990. From April, 1991 until October,
1991, Mr. Arnold was Division President and
International Operations Director and from June,
1990 until April, 1991, he was Division President
and Operations Director. Mr. Arnold is a citizen
of the United States.
Michael J. Cleare (51)..... Vice President of Johnson Matthey Inc. since 1990.
1401 King Road Division President since January, 1990 and
West Chester, PA 19380 Division Director, Materials Technology
(Chemicals), since November, 1994. Director since
November, 1990. From January, 1990 until November,
1994, Dr. Cleare was also Division Director of
Materials Technology (North America). Dr. Cleare
is a citizen of the United Kingdom.
Jeanmarie S. Leopold (47).. Vice President and Treasurer of Johnson Matthey
460 E. Swedesford Road Inc. and Johnson Matthey Investments, Inc. since
Wayne, PA 19087 April, 1992. Director of Johnson Matthey Inc.
since November, 1991 and Director of Johnson
Matthey Investments, Inc. since November, 1992.
Vice President and Treasurer of ACI Acquisition
Corporation since August, 1995. From 1988 until
April, 1992, Ms. Leopold has held the positions of
Director of Taxation and Vice President and
Assistant Treasurer of Johnson Matthey Inc. and
Johnson Matthey Investments, Inc. Ms. Leopold is a
citizen of the United States.
Daniel McL. Miller (59).... Vice President and General Counsel of Johnson
460 E. Swedesford Road Matthey Inc. and Johnson Matthey Investments, Inc.
Wayne, PA 19087 since 1985. Director and Secretary of ACI
Acquisition Corporation since August, 1995. Mr.
Miller is a citizen of the United States.
Daryl W. Perkins (57)...... Operations Director (Gold) since February, 1995.
4601 W. 2100S Director since November, 1991. From May, 1992
Salt Lake City, UT 84120 until February, 1995, Mr. Perkins was Vice
President and General Manager (West Deptford) and
from March, 1983 until May 1992, he was Vice
President and General Manager (Salt Lake City).
Mr. Perkins is a citizen of Canada.
John N. Sheldrick (45)..... Director of Johnson Matthey Inc. since November,
2-4 Cockspur Street 1990. Executive Director, Finance and Technology,
Trafalgar Square of Johnson Matthey Public Limited Company since
London SW1Y 5BQ December, 1992. Mr. Sheldrick has been a Director
of Cookson Matthey Ceramics plc since April, 1994.
From September, 1990 to December, 1992, Mr.
Sheldrick was Executive Director, Finance, of
Johnson Matthey Public Limited Company. Mr.
Sheldrick has been a Non-Executive Director of API
Group plc since January, 1995. From June, 1986
until September, 1990, Mr. Sheldrick was Group
Treasurer of The BOC Group plc. Mr. Sheldrick is a
citizen of the United Kingdom.
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH JOHNSON MATTHEY INC.; PRINCIPAL
NAME, AGE AND BUSINESS OCCUPATION
ADDRESS OR EMPLOYMENT; 5-YEAR EMPLOYMENT HISTORY
---------------------- ---------------------------------------------
<S> <C>
Ian G. Thorburn (54)........ President of Johnson Matthey Inc. since April,
2-4 Cockspur Street 1994. Director of Johnson Matthey Inc. since May,
Trafalgar Square 1994. Executive Director, Administration, of
London SW1Y 5BQ Johnson Matthey Public Limited Company since May,
1987. Mr. Thorburn has been a Director of Guy's
Hospital Nominees Limited since October, 1992. Mr.
Thorburn is a citizen of the United Kingdom.
Geoffrey Wild (39).......... Director of Johnson Matthey Inc. since April 1995.
Johnson Matthey Electronics President of JMEI, a direct wholly owned
Inc. ("JMEI") subsidiary of Johnson Matthey Inc., since October,
15128 E. Euclid 1994. President and Director of ACI Acquisition
Spokane, WA 99216 Corporation since August, 1995. Vice President,
Electronics, Materials Technology Division,
Johnson Matthey Inc. since April, 1992. Director
of Ryoka Matthey Corporation (Japan) since 1994.
From April, 1992 until October, 1994, Mr. Wild was
Vice President of JMEI and from August, 1990 until
April, 1992, he was General Manager of JMEI. Mr.
Wild is a citizen of the United Kingdom.
</TABLE>
III. DIRECTORS AND EXECUTIVE OFFICERS OF ACI ACQUISITION CORPORATION
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers of
ACI Acquisition Corporation are set forth below.
<TABLE>
<CAPTION>
POSITION WITH ACI ACQUISITION CORPORATION;
NAME, AGE AND BUSINESS PRINCIPAL OCCUPATION OR EMPLOYMENT; 5-YEAR
ADDRESS EMPLOYMENT HISTORY
---------------------- ------------------------------------------
<S> <C>
Jeanmarie S. Leopold (47)... Vice President and Treasurer of ACI Acquisition
Johnson Matthey Inc. Corporation since August, 1995. Vice President and
460 E. Swedesford Road Treasurer of Johnson Matthey Inc. and Johnson
Wayne, PA 19087 Matthey Investments, Inc. since April, 1992.
Director of Johnson Matthey Inc. since November,
1991 and Director of Johnson Matthey Investments,
Inc. since November, 1992. From 1988 until April,
1992, Ms. Leopold has held the positions of
Director of Taxation and Vice President and
Assistant Treasurer of Johnson Matthey Inc. and
Johnson Matthey Investments, Inc. Ms. Leopold is a
citizen of the United States.
Daniel McL. Miller (59)..... Director and Secretary of ACI Acquisition
Johnson Matthey Inc. Corporation since August, 1995. Vice President and
460 E. Swedesford Road General Counsel of Johnson Matthey Inc. and
Wayne, PA 19087 Johnson Matthey Investments, Inc. since 1985. Mr.
Miller is a citizen of the United States.
David W. Morgan (37)........ Director of ACI Acquisition Corporation since
Johnson Matthey Public August, 1995. Director of Cookson Matthey Ceramics
Limited Company plc since July, 1994 and Finance Director of
2-4 Cockspur Street Johnson Matthey's Materials Technology Division
Trafalgar Square since December, 1991. From December, 1990 until
London SW1Y 5BQ December, 1991, Mr. Morgan was Finance Director of
Johnson Matthey's Precious Metals Division and
from December, 1988 until December, 1990, he was
Finance Director of Johnson Matthey's Catalytic
Systems Division. Mr. Morgan is a citizen of the
United Kingdom.
Geoffrey Wild (39).......... President and Director of ACI Acquisition
JMEI Corporation since August, 1995. Director of
15128 E. Euclid Johnson Matthey Inc. since April, 1995. President
Spokane, WA 99216 of JMEI, a direct wholly owned subsidiary of
Johnson Matthey Inc., since October, 1994. Vice
President, Electronics, Materials Technology
Division, Johnson Matthey Inc. since April, 1992.
Director of Ryoka Matthey Corporation (Japan)
since 1994. From April, 1992 until October, 1994,
Mr. Wild was Vice President of JMEI and from
August, 1990 until April, 1992, he was General
Manager of JMEI. Mr. Wild is a citizen of the
United Kingdom.
</TABLE>
S-5
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal, certificates for Shares and any other required documents should be
sent or delivered by each stockholder of the Company or his or her broker,
dealer, commercial bank, trust company or other nominee to the Depositary at
one of its addresses set forth below.
The Depositary for the Offer is:
CHEMICAL MELLON SHAREHOLDER SERVICES
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
Chemical Mellon (for Eligible Institutions Only) Chemical Mellon
Shareholder Services (201) 296-4293 Shareholder Services
Midtown Station P.O. Box Reorganization
817 New York, NY 10018 Department 120 Broadway
13th Floor New York, NY 10271
Confirm by Telephone to: By Overnight Courier:
(201) 296-4209 Chemical Mellon
Shareholder Services
Reorganization
Department 85 Challenger
Road Ridgefield Park, NJ 07660
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
below. Additional copies of this Offer to Purchase, the Letter of Transmittal
and other tender offer materials may be obtained from the Information Agent,
and will be furnished promptly at Purchaser's expense. You may also contact
your broker, dealer, commercial bank or trust company or other nominee for
assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO OF GEORGESON & COMPANY INC. APPEARS HERE]
Wall Street Plaza
New York, NY 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
DILLON, READ & CO. INC.
535 Madison Avenue
New York, NY 10022
(212) 906-7527 (Collect)
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ADVANCE CIRCUITS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 21, 1995
BY
ACI ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
-------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, SEPTEMBER 18, 1995, UNLESS EXTENDED.
-------------------------------------------------------------------------------
The Depositary for the Offer is:
CHEMICAL MELLON SHAREHOLDER SERVICES
By Mail: By Facsimile Transmission: By Hand:
Chemical Mellon (for Eligible Institutions Only) Chemical Mellon
Shareholder Services (201) 296-4293 Shareholder Services
Midtown Station Reorganization Department
P.O. Box 817 120 Broadway 13th Floor
New York, NY 10018 New York, NY 10271
Confirm by Telephone: By Overnight Courier:
(201) 296-4209 Chemical Mellon
Shareholder Services
Reorganization Department
85 Challenger Road
Ridgefield Park, NJ 07660
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
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 if certificates for Shares are to
be forwarded herewith or, unless an Agent's Message (as defined in Instruction
2) is utilized, if delivery of Shares is to be made by book-entry transfer to
an account maintained by the Depositary at a Book-Entry Transfer Facility as
defined in and pursuant to the procedures set forth in Section 2 of the Offer
to Purchase. Shareholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Shareholders" and other shareholders are
referred to herein as "Certificate Shareholders".
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation
(as defined in Section 2 of the Offer to Purchase) with respect to, their
Shares and all other documents required hereby to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) must tender
their Shares in accordance with 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.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
-----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED OWNER(S) SHARES TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
ON CERTIFICATE(S))
-----------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)/1/ CERTIFICATE(S)/1/ TENDERED/2/
<S> <C> <C> <C>
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
TOTAL SHARES
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Need not be completed by Book-Entry Shareholders.
/2/ Unless otherwise indicated, it will be assumed that all Shares
described herein are being tendered. See Instruction 4.
<PAGE>
[_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _______________________________________________
Check box of Book-Entry Transfer Facility:
[_] The Depository [_] Midwest Securities [_] Philadelphia Depository
Trust Company Trust Company Trust Company
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) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution that Guaranteed Delivery ________________________________
If delivered by book-entry transfer check box:
[_] The Depository [_] Midwest Securities [_] Philadelphia Depository
Trust Company Trust Company Trust Company
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to ACI Acquisition Corporation, a Minnesota
corporation (the "Purchaser"), which is an indirect wholly owned subsidiary of
Johnson Matthey Public Limited Company, an English public limited company, the
above-described shares of Common Stock, par value $0.10 per share (the
"Shares"), of Advance Circuits, Inc., a Minnesota corporation (the "Company"),
upon the terms and subject to the conditions set forth in the Purchaser's
Offer to Purchase dated August 21, 1995, and this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the 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 or rights issued or issuable in respect thereof on or
after August 14, 1995), and irrevocably constitutes and appoints Chemical
Mellon Shareholder Services (the "Depositary") the true and lawful agent and
attorney-in-fact of the undersigned, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to the full extent of the undersigned's rights with respect to such
Shares (and any such other Shares or securities or rights), to (a) deliver
certificates for such Shares (and any such other Shares or securities or
rights) or transfer ownership of such Shares (and any such other Shares or
securities or rights) on the account books maintained by a Book-Entry Transfer
Facility together, in any such case, with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Purchaser, (b) present
such Shares (and any such other Shares or securities or rights) for transfer
on the Company's books and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any such other Shares or
securities or rights), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after August 14, 1995) and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any and all other Shares or other
securities or rights issued or issuable in respect thereof on or after August
14, 1995).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
<PAGE>
The undersigned hereby irrevocably appoints Geoff Wild, D. McL. Miller and
David W. Morgan, and each of them, and any other designees of the Purchaser,
the attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's shareholders or otherwise in such manner as each such attorney-in-
fact and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and otherwise to act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, the Shares tendered hereby that have been accepted for payment by the
Purchaser prior to the time any such action is taken and with respect to which
the undersigned is entitled to vote (and any and all other Shares, or other
securities or right issued or issuable in respect of such Shares on or after
August 14, 1995). This appointment is effective when, and only to the extent
that, the Purchaser accepts for payment such Shares as provided in the Offer
to Purchase. This power of attorney and proxy are irrevocable and are granted
in consideration of the acceptance for payment of such Shares in accordance
with the terms of the Offer. Upon such acceptance for payment, all prior
powers of attorney, proxies and consents given by the undersigned with respect
to such Shares or other securities or rights will, without further action, be
revoked and no subsequent powers of attorney, proxies, consents or revocations
may be given (and, if given, will not be deemed effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
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 the Purchaser upon the terms and subject to the conditions of
the Offer. Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the Offer, the price to be paid to the
undersigned will be the amended price.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment (and any accompanying
documents, as appropriate) to the address(es) of the registered holder(s)
appearing under "Description of Shares Tendered". In the event that both the
Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or return any
certificates for Shares not tendered or accepted for payment (and any
accompanying documents, as appropriate) in the name of, and deliver such check
and/or return such certificates (and any accompanying documents as
appropriate) to, the person or persons so indicated. Unless otherwise
indicated herein under "Special Payment Instructions", please credit any
Shares tendered herewith by book-entry transfer that are not accepted for
payment by crediting the account at the Book-Entry Transfer Facility
designated above. The undersigned recognizes that the Purchaser has no
obligation pursuant to the Special Payment Instructions to transfer any Shares
from the name of the registered holder thereof if the Purchaser does not
accept for payment any of the Shares so tendered.
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates: _________
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7) (SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for Shares not tendered or cates for Shares not tendered or
not accepted for payment and/or not accepted for payment and/or
the check for the purchase price the check for the purchase price
of Shares accepted for payment of Shares accepted for payment
are to be issued in the name of (and any accompanying documents,
someone other than the under- as appropriate) are to be sent to
signed, or if Shares delivered by someone other than the under-
book-entry transfer that are not signed, or to the undersigned at
accepted for payment are to be an address other than that above.
returned by credit to an account
maintained at a Book-Entry Trans-
fer Facility other than the ac-
count indicated above.
Mail: [_] Check [_] Certificate(s)
to:
Name _____________________________
(PLEASE PRINT)
Issue: [_] Check [_] Certificate(s) Address __________________________
to:
__________________________________
(INCLUDE ZIP CODE)
Name _____________________________
(PLEASE PRINT) __________________________________
Address __________________________ (EMPLOYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
__________________________________
(INCLUDE ZIP CODE)
__________________________________
(EMPLOYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
[_] Credit unpurchased Shares de-
livered by book-entry transfer
to the Book-Entry Transfer Fa-
cility account set forth below:
Check appropriate Box:
[_] The Depository Trust Company
[_] Midwest Securities Trust Com-
pany
[_] Philadelphia Depository Trust
Company
__________________________________
(ACCOUNT NUMBER)
<PAGE>
-------------------------------------------------------------------
SIGN SIGN HERE
HERE (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
________________________________________________________________
________________________________________________________________
(SIGNATURE(S) OF SHAREHOLDER(S)
Dated: ___________________________________________________, 1995
(Must be signed by registered holder(s) as name(s) appear(s) on
the certificate(s) for the Shares 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 trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please
provide the following information and see Instruction 5.)
Dated: ___________________________________________________, 1995
Name(s)_________________________________________________________
___________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) __________________________________________
Address_________________________________________________________
___________________________________________________________
(INCLUDE ZIP CODE)
Daytime Area Code and Telephone No. ( ) ______________________
Employer Identification or
Social Security Number _________________________________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ___________________________________________
Name ___________________________________________________________
(PLEASE PRINT)
Name of Firm ___________________________________________________
Address_________________________________________________________
___________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ( ) ______________________________
Dated: ___________________________________________________, 1995
-------------------------------------------------------------------
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (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. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
shareholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section 2
of the Offer to Purchase. For a shareholder validly to tender Shares pursuant
to the Offer, either (a) a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date and either
certificates for tendered Shares must be received by the Depositary at one of
such addresses or Shares must be delivered pursuant to the procedures for
book-entry transfer set forth herein (and a Book-Entry Confirmation received
by the Depositary), in each case prior to the Expiration Date, or (b) the
tendering shareholder must comply with the guaranteed delivery procedures set
forth below and in Section 2 of the Offer to Purchase.
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer 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 procedures set forth in Section 2 of the Offer to Purchase. Pursuant
to such procedures, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be
received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares in proper form for transfer (or a Book-
Entry Confirmation with respect to all such Shares), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or, in the case of a book-entry transfer,
an Agent's Message, and any other required documents are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery as provided in Section 2 of the Offer to
Purchase. A "trading day" is any day on which The NASDAQ Stock Market, Inc.
National Market is open for business.
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 a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility
has received an express acknowledgement from the participant in such Book-
Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
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 shareholders, 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
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled
"Number of Shares Tendered". In any such case, new certificate(s) for the
remainder of the Shares that were evidenced by the older certificate(s) will
be sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the expiration
of the Offer. 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 of the Shares
tendered hereby, the signature must correspond with the name as written on the
face of the certificate(s) without 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.
<PAGE>
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence satisfactory
to the Purchaser of their 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 accepted for payment 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 certificates 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. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person(s) other than the registered holder(s),
or if tendered certificates are registered in the name(s) of any person(s)
other than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder(s) or such
person(s)) payable on account of the transfer to such person(s) 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 is to be issued in
the name of, and/or certificates for Shares not accepted for payment are to be
returned to, a person other than the signer of this Letter of Transmittal or
if a check is to be sent and/or such certificates are to be returned to a
person 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. Any shareholder(s) delivering Shares by book-
entry transfer may request that Shares not accepted for payment be credited to
such account maintained at a Book-Entry Transfer Facility as such
shareholder(s) may designate.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
9. 31% BACKUP WITHHOLDING. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a shareholder
surrendering shares in the Offer must, unless an exemption applies, provide
the Depositary with such shareholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 in this Letter of Transmittal and certify under
penalties of perjury that such TIN is correct and that such shareholder is not
subject to backup withholding. If a shareholder does not provide such
shareholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on
such shareholder and payment of cash to such shareholder pursuant to the Offer
may be subject to backup withholding of 31%.
Backup withholding is not an additional income 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 shareholder upon filing an
income tax return.
The shareholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held 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 guidance
on which number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN
is provided to the Depositary. However, such amounts will be refunded to such
shareholder if a TIN is provided to the Depositary within 60 days.
Certain shareholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign shareholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
<PAGE>
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the shareholder should properly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares lost
and then telephone the Information Agent who will instruct the shareholder as
to the steps that must be taken in order to replace the certificate. 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 FACSIMILE THEREOF), TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND CERTIFICATES FOR TENDERED SHARES
MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT TO THE
PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION DATE,
OR THE TENDERING SHAREHOLDER MUST COMPLY WITH THE PROCEDURES FOR GUARANTEED
DELIVERY.
--------------------------------------------------------------------------------
PAYER'S NAME: CHEMICAL MELLON SHAREHOLDER SERVICES
-------------------------------------------------------------------------------
PART 1--Please provide your
TIN in the box at right and _______________________
certify by signing and Social Security
dating below Number(s)
SUBSTITUTE
OR
FORM W-9
DEPARTMENT OF _______________________
THE TREASURY Employer
INTERNAL REVENUE Identification
SERVICE Number(s)
--------------------------------------------------------
PART 2--CERTIFICATION-- PART 3--
PAYER'S REQUEST Under penalties of perjury, I certify AWAITING TIN
FOR TAXPAYER that:
IDENTIFICATION (1) The number shown on this form is [_]
NUMBER (TIN) my correct Taxpayer
Identification Number (or I am ----------------
waiting for a number to be issued PART 4--EXEMPT
to me) and TIN
(2) I am not subject to backup
withholding because (a) I am [_]
exempt from backup withholding or
(b) I have not been notified by
the Internal Revenue Service (the
"IRS") that I am subject to
backup withholding as a result of
a failure to report all interest
or dividends or (c) the IRS has
notified me that I am no longer
subject to backup withholding.
-------------------------------------------------------------------------------
Certification instructions--You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup withhold-
ing because of under reporting interest or dividends on your tax returns.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you
are no longer subject to backup withholding, do not cross out such Item
(2). If you are exempt from backup withholding, check the box in Part 4
above.
............................................................................
SIGNATURE........................................ DATE..............., 1995
--------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF SUBSTITUTE FORM W-9
--------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that 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 Center 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 provide a certified
taxpayer identification number within 60 days.
SIGNATURE __________________________________________________ DATE
--------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 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
INFORMATION.
<PAGE>
The Information Agent for the Offer is:
[LOGO OF GEORGESON & COMPANY INC. APPEARS HERE]
Wall Street Plaza
New York, NY 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
DILLON, READ & CO. INC.
535 Madison Avenue
New York, NY 10022
(212) 906-7527 (Collect)
August 21, 1995
<PAGE>
EXHIBIT (a)(3)
DILLON, READ & CO. INC.
535 MADISON AVENUE
NEW YORK, NEW YORK 10022
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ADVANCE CIRCUITS, INC.
AT
$22.50 NET PER SHARE
BY
ACI ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
-------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 18, 1995, UNLESS EXTENDED.
-------------------------------------------------------------------------------
August 21, 1995
To Brokers, Dealers,
Commercial Banks, Trust
Companies and Other Nominees:
We have been appointed by ACI Acquisition Corporation, a Minnesota
corporation (the "Purchaser") and an indirect wholly owned subsidiary of
Johnson Matthey Public Limited Company, an English public limited company
("Parent"), to act as Dealer Manager in connection with the Purchaser's offer
to purchase all outstanding shares of Common Stock, par value $0.10 per share
(the "Shares"), of Advance Circuits, Inc., a Minnesota corporation (the
"Company"), at $22.50 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated August 21, 1995 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated August 21, 1995;
2. Letter of Transmittal to be used by shareholders of the Company in
accepting the Offer;
3. A letter to shareholders of the Company from Robert W. Heller, President
and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company and mailed to shareholders of
the Company;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
5. Notice of Guaranteed Delivery;
<PAGE>
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to Chemical Mellon Shareholder Services, the
Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, SEPTEMBER 18, 1995,
UNLESS EXTENDED.
The Board of Directors of Advance Circuits, Inc., acting upon the unanimous
recommendation of a special committee of the Board, has unanimously adopted
resolutions approving the Offer, determining that the terms of the Offer are
fair to, and in the best interests of, the Company and its shareholders and
recommending that the Company's shareholders accept the Offer.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your clients.
Any inquiries you may have with respect to the Offer should be addressed to
Georgeson & Company Inc., the Information Agent, at Wall Street Plaza New York,
New York 10005, (212) 440-9800 or the Dealer Manager, Dillon, Read & Co. Inc.,
at 535 Madison Avenue, New York, New York 10022, (212) 906-7527.
Requests for copies of the enclosed materials should be directed to the
Information Agent at the above address and telephone number.
Very truly yours,
Dillon, Read & Co. Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY STATEMENT
OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ADVANCE CIRCUITS, INC.
AT
$22.50 NET PER SHARE
BY
ACI ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, SEPTEMBER 18, 1995, UNLESS EXTENDED.
--------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated August 21, 1995
(the "Offer to Purchase"), and a Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer")
relating to the Offer by ACI Acquisition Corporation, a Minnesota corporation
(the "Purchaser") and an indirect wholly owned subsidiary of Johnson Matthey
Public Limited Company, an English public limited company ("Parent"), to
purchase for cash all outstanding shares of Common Stock, par value $0.10 per
share (the "Shares"), of Advance Circuits, Inc., a Minnesota corporation (the
"Company") at a price of $22.50 per Share net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer. Holders of Shares
whose certificates for such Shares are not immediately available or who cannot
deliver their certificates and all other required documents to Chemical Mellon
Shareholder Services (the "Depositary") or complete the procedures for book-
entry transfer 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.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender any of
or all the Shares held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Please note the following:
1. The tender price is $22.50 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions of the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Monday, September 18, 1995, unless extended by the Purchaser.
4. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date of the Offer that
number of Shares that would represent at least 51% of all outstanding Shares on
a fully diluted basis on the date of purchase.
<PAGE>
5. The Board of Directors of Advance Circuits, Inc., acting upon the
unanimous recommendation of a special committee of the Board, has unanimously
adopted resolutions approving the Offer, determining that the terms of the
Offer are fair to, and in the best interests of, the Company and its
shareholders and recommending that the Company's shareholders accept the Offer.
6. Any stock transfer taxes applicable to a sale of Shares to the Purchaser
will be borne by the Purchaser, except as otherwise provided in Instruction 6
to the Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit a
tender on your behalf prior to the expiration of the Offer.
If you wish to have us tender any of or all the Shares held by us for your
account, please so instruct us by completing, executing, detaching and
returning to us the instruction form set forth below. If you authorize the
tender of your Shares, all such Shares will be tendered unless otherwise
specified below. An envelope to return your instructions to us is enclosed.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to) such Shares, (b) a Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or, in the case of a book-entry transfer effected pursuant to the
procedure set forth in Section 2 of the Offer to Purchase, an Agent's Message,
and (c) any other documents required by the Letter of Transmittal. Accordingly,
tendering shareholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares are
actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
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 or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF COMMON STOCK
OF
ADVANCE CIRCUITS, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
of ACI Acquisition Corporation dated August 21, 1995 (the "Offer to Purchase"),
and the related Letter of Transmittal relating to an offer by ACI Acquisition
Corporation, a Minnesota corporation (the "Purchaser") and an indirect wholly
owned subsidiary of Johnson Matthey Public Limited Company, an English public
limited company, to purchase for cash all outstanding shares of Common Stock,
par value $0.10 per share (the "Shares"), of Advance Circuits, Inc., a
Minnesota corporation.
This will instruct you to tender the number of Shares indicated below held by
you for the account of the undersigned, on the terms and subject to the
conditions in such Offer to Purchase and Letter of Transmittal.
--------------------------------------------------------------------------------
Number of Shares to be Tendered:* _________________________________________
Date: _____________________________________________________________________
SIGN HERE
Signature(s): _____________________________________________________________
(Print Name(s)): __________________________________________________________
(Print Address(es)): ______________________________________________________
(Area Code and Telephone Number(s)): ______________________________________
(Taxpayer Identification or Social Security Number(s)): ___________________
--------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE>
EXHIBIT (a)(5)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ADVANCE CIRCUITS, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, SEPTEMBER 18, 1995, UNLESS EXTENDED.
------------------------------------------------------------------------------
As set forth in Section 2 of the Offer to Purchase (as defined below), this
Notice of Guaranteed Delivery or one substantially equivalent hereto must be
used to accept the Offer (as defined below) if certificates for shares of
Common Stock, par value $ 0.10 per share (the "Shares"), of Advance Circuits,
Inc., a Minnesota corporation (the "Company"), are not immediately available or
if the procedure for book-entry transfer cannot be completed on a timely basis
or time will not permit all required documents to reach the Depositary referred
to below prior to the Expiration Date (as defined in the Offer to Purchase).
This Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or letter to the Depositary and must include a
guarantee by an Eligible Institution (as defined in the Offer to Purchase). See
Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
CHEMICAL MELLON SHAREHOLDER SERVICES
By Mail: By Facsimile By Hand:
Midtown Station Transmission: Reorganization
P.O. Box 817 (for Eligible Department
New York, NY 10018 Institutions Only) 120 Broadway 13th Floor
(201) 296-4293 New York, NY 10271
Confirm by Telephone: By Overnight Courier:
(201) 296-4209 Reorganization
Department
85 Challenger Road
Ridgefield Park, NJ
07660
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures.
If a signature on a Letter of Transmittal referred to below is required to be
guaranteed by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares (or a Book-Entry Confirmation (as defined in the Offer
to Purchase) with respect to such Shares) to the Depositary within the time
period shown herein. Failure to do so would result in a financial loss to such
Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to ACI Acquisition Corporation, a Minnesota
corporation (the "Purchaser") and an indirect wholly owned subsidiary of
Johnson Matthey Public Limited Company, an English public limited company, upon
the terms and subject to the conditions set forth in the Offer to Purchase
dated August 21, 1995 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with all amendments or supplements thereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged,
the number of Shares indicated below pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase.
Number of Shares: ................. Name(s) of Record Holder(s): ......
Certificate Nos. (if available): .. ...................................
PLEASE PRINT
...................................
Address(es): ......................
(Check one if Shares will be
tendered by book-entry transfer) ...................................
ZIP CODE
[_] The Depository Trust Company
Area Code and Tel. No.: ...........
[_] Midwest Securities Trust
Company
Signature(s): .....................
[_] Philadelphia Depository Trust ...................................
Company
Account Number ....................
Dated: ............................
THE GUARANTEE SET FORTH BELOW MUST BE COMPLETED.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agent's Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or Book-Entry Confirmation with respect to such
Shares, in any such case together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or an Agent's Message, and any other required documents, within
three NASDAQ National Market trading days after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
All terms used herein have the meanings set forth in the Offer to Purchase.
Name of Firm: ..................... ...................................
AUTHORIZED SIGNATURE
Address: ..........................
Name: .............................
................................... PLEASE PRINT
ZIP CODE
Title: ............................
Area Code and Tel. No.: ...........
Dated: ............................
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY; CERTIFICATES FOR SHARES SHOULD BE SENT ONLY WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE>
EXHIBIT (a)(6)
--------------------------------------------------------------------------------
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF:
--------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the account or,
account) if combined funds, any one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of the account or,
if joint funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the minor is the
only contributor, the minor(1)
6. Account in the name of guardian or The ward, minor, or incompetent
committee for a designated ward, person(3)
minor, or incompetent person
7. a. The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b. So-called trust account that is The actual owner(4)
not a legal or valid trust under
State law
--------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER INDENTIFICATION
NUMBER OF:
--------------------------------------------------------------------------------
<S> <C>
8. Sole proprietorship account The owner(4)
9. A valid trust, estate or pension The legal entity (Do not furnish the
trust identifying number of the personal
representative or trustee unless the
legal entity itself is not
designated in the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable,or educational The organization
organization account
12. Partnership account held in the name The partnership
of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
--------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
Note: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
Obtaining A Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include the
following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government,or any
agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer indentification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
<PAGE>
EXEMPT PAYEES DESCRIBED ABOVE MUST STILL COMPLETE THE SUBSTITUTE FORM W-9
ENCLOSED HEREWITH TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE
SUBSTITUTE FORM W-9 WITH THE PAYER, REMEMBERING TO CERTIFY YOUR TAXPAYER
IDENTIFICATION NUMBER ON PART III OF THE FORM AND WRITE "EXEMPT" ON THE FACE OF
THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice. Section 6109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Beginning January 1, 1993, payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may also
apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments. If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income and such failure is due to negligence, a
penalty of 20% is imposed on any portion of an under-payment attributable to
that failure.
(3) Civil Penalty for False Information With Respect to Withholding. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty, Falsifying Information. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
Page 2
<PAGE>
EXHIBIT (a)(7)
Joint News Release by:
JOHNSON MATTHEY PLC ADVANCE CIRCUITS, INC.
2-4 Cockspur Street 5929 Baker Road, Suite 470
Trafalgar Square Minnetonka, Minnesota 55345
London SW1Y 5BQ
Contact: Tom Clohesy Contact: Thomas I. Mueller, Executive
Gavin Anderson, New York Vice President, Secretary and Treasurer
(212-373-0231) (612-988-8701)
FOR IMMEDIATE RELEASE
JOHNSON MATTHEY TO ACQUIRE ADVANCE CIRCUITS
-------------------------------------------
MINNEAPOLIS, August 15, 1995 -- Johnson Matthey plc and Advance Circuits,
Inc. announced today that they have signed a definitive merger agreement
providing for Johnson Matthey to acquire Advance Circuits. Under this
agreement, which has been approved by the boards of each company, an indirect
wholly owned US subsidiary of Johnson Matthey will be merged into Advance
Circuits. In connection with the merger, Johnson Matthey intends shortly to
commence a cash tender offer for all the outstanding shares of common stock of
Advance Circuits at $22.50 per share. Based upon 7.6 million Advance Circuits
common shares currently outstanding, the aggregate consideration to be paid in
the tender offer and the merger, including payment in respect of outstanding
stock options, will amount to approximately $171 million.
-1-
<PAGE>
The acquisition is not subject to a financing condition but is subject to
clearance under the Hart-Scott-Rodino Antitrust Improvements Act and to certain
other conditions.
Advance Circuits, Inc. is a leading interconnect solution provider whose
products include complex multilayer printed circuit boards, flexible circuit
assemblies, semiconductor packages and other manufacturing services.
In the nine months ended May 27, 1995, Advance Circuits had net sales of
$127.8 and net income of $7.2 million ($0.98 per share). Advance Circuits
anticipates that its earnings for the fourth quarter ended August 26, 1995 will
be substantially less than its earnings for the third quarter.
Johnson Matthey, a United Kingdom public company, is a world leader in
advanced materials technology. Its principal businesses are the production of
electronic materials, specialty chemical and pharmaceutical compounds; the
manufacture of catalysts and pollution control systems; the refining,
fabrication and marketing of precious metals and the manufacturing of decorative
and specialized materials for the ceramics, plastics, paint, ink and
construction industries. Johnson Matthey has operations in 29 countries and
employs 6,000 people. Its products are sold across the world to a wide range of
advanced technology industries. In the fiscal year ended March 31, 1995,
Johnson Matthey's sales totaled approximately $3.5 billion.
Commenting on this news, David Davies, Chairman and Chief Executive of
Johnson Matthey, said:
-2-
<PAGE>
"The acquisition of Advance Circuits will greatly expand the product range
of Johnson Matthey's Electronic Materials business, in particular in the
key emerging market of plastic laminate packaging. Johnson Matthey is
committed to investing in superior technology and to serving our customers
in markets worldwide. The acquisition of Advance Circuits further
underlines this commitment."
Robert Heller, Chairman and Chief Executive Officer of Advance Circuits, said:
"I am especially pleased with the merger because of Advance Circuits' enhanced
ability to execute its global and semiconductor packaging strategies."
Dillon, Read & Co. Inc. and Baring Brothers Limited are acting as financial
advisors for Johnson Matthey, with Dillon Read acting as dealer manager for the
offer. Alex Brown & Sons Incorporated has rendered a fairness opinion for
Advance Circuits.
The common stock of Advance Circuits is traded in the over-the-counter market
and prices are quoted on the Nasdaq National Market under the symbol "ADVC."
-3-
<PAGE>
EXHIBIT (a)(8)
________________________________________
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated August 21, 1995, and the related Letter of Transmittal and any
amendments or supplements thereto and is being made to all holders of
Shares. 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
laws of such jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer will be deemed made on behalf of the Purchaser by Dillon,
Read & Co. Inc. or one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
________________________________________
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
ADVANCE CIRCUITS, INC.
at
$22.50 Net Per Share
by
ACI ACQUISITION CORPORATION
An Indirect Wholly Owned Subsidiary of
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
<PAGE>
ACI Acquisition Corporation, a Minnesota corporation (the
"Purchaser"), which is an indirect wholly owned subsidiary of Johnson Matthey
Public Limited Company, an English public limited company ("Parent"), is
offering to purchase all outstanding shares of Common Stock, par value $0.10 per
share (the "Shares"), of Advance Circuits, Inc., a Minnesota corporation (the
"Company"), at $22.50 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 21, 1995 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
MONDAY, SEPTEMBER 18, 1995, UNLESS EXTENDED.
--------------------------------------------------------------------------------
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of August 14, 1995 (the "Merger Agreement"), among the Purchaser,
Parent and the Company which provides that, following the Offer and upon the
terms and subject to the conditions of the Merger Agreement, the Purchaser will
be merged with and into the Company and each outstanding Share (except those
Shares owned by the Company, any subsidiary of the Company, Parent, the
Purchaser or any other subsidiary of Parent or that are subject to
-2-
<PAGE>
dissenters' rights) will be converted into the right to receive $22.50 in cash,
without interest.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in the Offer
to Purchase) that number of Shares that would represent at least 51% of all
outstanding Shares on a fully diluted basis on the date of purchase.
The Board of Directors of the Company, acting upon the unanimous
recommendation of a special committee of the Board, has unanimously adopted
resolutions approving the Offer, determining that the terms of the Offer are
fair to, and in the best interests of, the Company and its shareholders and
recommending that the Company's shareholders accept the Offer.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares properly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to Chemical Mellon Shareholder Services (the "Depositary") of the
Purchaser's acceptance for payment of such Shares. Upon the terms and subject
to the conditions of the Offer, payment for Shares accepted for payment pursuant
to the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering shareholders for the purpose
of receiving payment from the
-3-
<PAGE>
Purchaser and transmitting payment to tendering shareholders. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for (or a timely
Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to)
such Shares, (ii) a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase), and (iii) any other documents required by the Letter of Transmittal.
Under no circumstances will interest be paid on the purchase price of the Shares
to be paid by the Purchaser, regardless of any extension of the Offer or any
delay in making such payment.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after October
20, 1995. 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 the Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name
-4-
<PAGE>
of the registered holder of the Shares to be withdrawn, if different from the
name of the person who tendered the Shares. If certificates for Shares have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and, unless such Shares have
been tendered by an Eligible Institution (as defined in Section 2 of the Offer
to Purchase), 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 as set forth in Section 2 of the Offer to
Purchase, any notice of withdrawal must also specify the name and number of the
account at the appropriate Book-Entry Transfer Facility (as defined in Section 2
of the Offer to Purchase) to be credited with the withdrawn Shares and otherwise
comply with such Book-Entry Transfer Facility's procedures. Withdrawals of
tenders of Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for any purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 2 of the Offer to Purchase at any time prior to
the Expiration Date. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined
-5-
<PAGE>
by the Purchaser in its sole discretion, which determination will be final and
binding.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment and thereby purchased tendered Shares as, if and when the
Purchaser gives oral or written notice to the Depositary of its acceptance of
the tenders of such Shares.
The Purchaser expressly reserves the right, at any time or from time
to time, in its sole discretion, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 under the Securities Exchange Act of 1934, as amended, is contained
in the Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the Letter of Transmittal, which are being
mailed to shareholders of record, contain important information which should be
read carefully before any decision is made with respect to the Offer.
Requests for copies of the Offer to Purchase and the Letter of
Transmittal may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at the Purchaser's expense. Questions or
requests
-6-
<PAGE>
for assistance may be directed to the Information Agent or the Dealer Manager,
as set forth below.
The Information Agent is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10022
(212) 906-7527 (Collect)
August 21, 1995
-7-
<PAGE>
EXHIBIT (a)(9)
JOHNSON MATTHEY COMMENCES $22.50 PER SHARE TENDER OFFER FOR ADVANCE CIRCUITS
NEW YORK, New York -- August 21, 1995 -- Johnson Matthey Public Limited
Company announced today that ACI Acquisition Corporation, an indirect wholly
owned subsidiary of Johnson Matthey, has commenced its previously announced
tender offer for all outstanding shares of common stock of Advance Circuits,
Inc. (NASDAQ:ADVC) at a price of $22.50 per share.
The tender offer is being made pursuant to the previously announced
Agreement and Plan of Merger among Johnson Matthey, ACI Acquisition Corporation
and Advance Circuits. Following the successful completion of the tender offer,
ACI Acquisition Corporation will be merged with and into Advance Circuits, and
each remaining Advance Circuits share will be converted into the right to
receive $22.50, without interest.
The Board of Directors of Advance Circuits, acting upon the unanimous
recommendation of a special committee of the Board, unanimously adopted
resolutions approving the offer, the merger and the merger agreement,
determining that the terms of the offer and merger are fair to, and in the best
interests of, Advance Circuits and its shareholders, and recommending that
Advance Circuits' shareholders accept the offer.
The tender offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration date of the offer
that number of shares that would constitute at least 51% of the outstanding
Advance Circuits shares on a fully diluted basis.
The transaction has a value of approximately $171 million.
The tender offer and withdrawal rights under the tender offer will expire
at 12:00 midnight, New York City time, on Monday, September 18, 1995, unless
extended.
Dillon, Read & Co. Inc. is acting as dealer manager for the tender offer.
Georgeson & Company Inc. is the information agent.
CONTACT: Tom Clohesy
Gavin Anderson, New York
(212-373-0231)
<PAGE>
Exhibit(b)
REVOLVING CREDIT FACILITY
THIS AGREEMENT is made on [ ] between JOHNSON MATTHEY PLC whose registered
office is at New Garden House, 78 Hatton Garden, London ECIN 8JP (hereinafter
called "JM") of the one part and [ ] or its assigns (hereinafter called
"the Bank") of the other part
WHEREBY IT IS AGREED as follows:
PART 1
------
DEFINITIONS
-----------
1. (1) In this Agreement each of the expressions listed below shall have the
meaning attributed to it hereunder:
(a) The parties and related expressions
-----------------------------------
(i) "Borrower" means JM and any Subsidiary of JM in respect
of which JM has given and not withdrawn a Designation
Notice;
(ii) "Designation Notice" means a notice given pursuant to
Clause 9 hereof substantially in the form set out in
Schedule B;
(iii) "Group" means JM and those of its Subsidiaries whose
accounts are dealt with in the Latest Consolidated
Accounts;
(iv) "Lender" means the Bank and any other lender designated
as such in the Schedule of Terms;
(v) "Schedule of Terms" means the terms set out in
Schedule A hereto as from time to time amended by the
written agreement of JM and the Bank;
(vi) "Subsidiary" has the meaning attributed to it by
Section 736 of The Companies Act 1985 as amended;
<PAGE>
-2-
(vii) "Guarantee" means a Guarantee substantially on the
terms set out in Schedule C hereto;
(viii) "Latest Consolidated Accounts" means at any date the
most recently published audited consolidated accounts
of the Group.
(b) Operating Definitions
---------------------
(i) "Business Day" means a day on which banks and the
relevant financial markets are open for the transaction
of the business contemplated by this Agreement and, if
a notice or other communication is to be delivered
hereunder, a day on which banks are open for business
in the place(s) in which such notice or other
communication is to be received.
(ii) "Currency Equivalent" means in respect of each Tranche
drawn in a currency other than the Facility Currency
the amount of the Facility Currency which can be
purchased with the amount and the currency of the
Tranche at the Bank's spot rate for the purchase of the
Facility Currency in the London foreign exchange market
at or about 11:00am on the Business Day which is two
Business Days earlier than the date of drawdown or the
most recent renewal of that Tranche;
(iii) "Dollars" means the lawful currency for the time being
of the United States of America;
(iv) "Drawdown Period" means a period beginning on the date
hereof and ending on the Repayment Date;
(v) "Facility Amount" means the amount which the Bank has
agreed for the time being to make available to
Borrowers as specified by paragraph 2(1) of the
Schedule of Terms;
(vi) "Facility Currency" means the currency first specified
in paragraph 2(1) of the Schedule of Terms;
(vii) "Interest Period" means a period determined in
accordance with Clause 4 hereof;
(viii) "LIBOR" means in relation to any Tranche and for any
Interest Period the annual rate of interest offered by
prime banks to prime banks in the London interbank
market for deposits of the currency and for the amount
of that Tranche for that Interest Period;
(ix) "Loan" means the aggregate amount for the time being
owing to the Lender under this Agreement;
<PAGE>
-3-
(x) "Maturity Date" means, in respect of each Tranche, the
last day of the Interest Period applicable to that
Tranche or, if such day is not a Business Day, the
immediately preceding Business Day;
(xi) "Repayment Date" means the date established as the
Repayment Date under paragraph 6 of the Schedule of
Terms;
(xii) "Sterling" means the lawful currency for the time being
of the United Kingdom;
(xiii) "Tranche" means a portion of the Loan, whether such
portion arose from one or from several drawings, which
is owed by a single Borrower to a single Lender in a
single currency and to which a single Interest Period
applies.
(2) Without prejudice to paragraph 6(1)(d) of Schedule E hereof,
references in this Agreement to an obligation, act or default of a
Borrower other than JM shall be deemed for all the purposes of this
Agreement to apply only if that Borrower is, at the relevant time,
indebted to a Lender hereunder.
(3) The obligations of the Borrowers hereunder are several and not joint.
(4) Headings are for ease of reference only and shall not be taken into
account in construing this Agreement.
(5) References in this Agreement to clauses, sub-clauses, paragraphs and
schedules are references to those contained in this Agreement.
(6) The Schedules to this Agreement are an integral part of this
Agreement and references to this Agreement includes reference
thereto.
(7) References to the singular include a reference to the plural and
vice versa.
PART II
-------
OPERATING ARRANGEMENTS
----------------------
2. FACILITY AND COMMITMENT FEE
---------------------------
(1) The Bank undertakes to provide to the Borrower by way of advances the
Facility Amount specified in paragraph 2(1) of the Schedule of Terms.
(2) JM may at any time by not less than seven calendar days irrevocable
written notice given prior to the end of the Drawdown Period notify
the Bank that the Facility Amount is to be cancelled in whole or in
part, whereupon the Facility Amount shall be reduced accordingly.
<PAGE>
-4-
(3) Except when the Loan is to be repaid in full on the expiry of any
notice given under Clause 2(2) hereof, no notice given thereunder
shall be made so as to reduce the Facility Amount below the amount
of the Loan.
(4) JM undertakes to pay a commitment fee to the Bank as specified in
paragraph 3 of the Schedule of Terms during the Drawdown Period.
(5) As of and with effect from the date of this Agreement and subject to
the satisfaction of the conditions precedent referred to in Clause 10
hereof, (i) this Agreement shall replace and be in substitution of
[ ] of the credit facility agreement dated [ ], as
amended, ("Existing Agreement") made between the Bank and JM and (ii)
the terms and conditions of this Agreement shall apply to all
borrowings outstanding as at the date of this Agreement under the
Existing Agreement save that in relation to Tranches (as defined in
the Existing Agreement) outstanding at the date of this Agreement,the
interest determined pursuant to Clause 4 of the Existing Agreement in
respect of such Tranches shall continue to apply thereto for their
respective current Interest Periods (as defined in the Existing
Agreement).
3. DRAWINGS
--------
(1) On any Business Day falling within the Drawdown Period, new Tranches
may be drawn hereunder and any existing Tranche renewed on its
Maturity Date, following receipt by the Lender from a Borrower of
the notice referred to in paragraph 4 of the Schedule of Terms.
(2) No new Tranches may be drawn hereunder and no existing Tranches
renewed if and to the extent that immediately thereafter the amount
of the Loan including the Currency Equivalent of any Tranche would
exceed the Facility Amount.
(3) If a Tranche is drawn in domestic Dollars, it shall be evidenced by
a promissory note which accords with the normal practice of the
market from time to time for the amount of such Tranche.
4. INTEREST AND INTEREST PERIODS
-----------------------------
(1) Interest for each Tranche will be calculated in accordance with
paragraph 5 of the Schedule of Terms.
(2) Each notice of a drawing or renewal of a Tranche will specify the
interest calculation method selected for the purposes of Clause 4(1)
hereof and, where relevant, the Interest Period.
(3) For each Tranche the Borrower shall select Interest Periods which
shall last for 1, 3, or 6 months or such other period as the Lender
and the Borrower may agree. Each Interest Period shall end on a
Business Day (not being later than the Repayment Date). Interest
shall be payable at the end of each Interest Period but not less
frequently than 6 monthly.
<PAGE>
-5-
(4) If a Borrower fails to pay any sum due hereunder on the due date,
interest at the rate calculated under paragraph 5 of the Schedule of
Terms for Interest Periods (not exceeding 3 months) selected by the
Lender will be payable, as well after as before judgment, on the
amount concerned from the due date to the date of actual payment.
5. REPAYMENT AND REDRAWINGS
------------------------
(1) The whole of each Tranche together with interest thereon, less any
amount for which the Borrower has given notice to renew under Clause
3(1) hereof, shall be repaid on its Maturity Date.
(2) Any amount repaid in respect of any Tranche during the Drawdown
Period shall, subject to the provisions of Clause 3(2) hereof, be
available for further drawings hereunder.
(3) If any Tranche is repaid otherwise than on its Maturity Date, the
Borrower will reimburse to the Lender any reasonable costs, loss
(other than loss of profit) or expense incurred by the Lender
arising directly as a result thereof to the extent that the Lender
cannot reasonably mitigate the same. The Lender's certificate as to
the amount of such cost, loss or expense shall be conclusive in the
absence of manifest error.
(4) All payments of principal and interest in respect of each Tranche
shall be made in the currency thereof in immediately available funds
or such other funds as accord with the practice of the relevant
market to or to the order of the relevant Lender.
(5) The whole of the Loan, together with accrued interest thereon then
unpaid, shall be repaid not later than the Repayment Date.
6. TAXES
-----
All payments to be made by a Borrower hereunder shall be made free and
clear of any deduction or withholding and without set-off or counterclaim.
If the Borrower is required by law to make any deduction or withholding on
account of tax or otherwise from any such payment, the sum due from it in
respect of such payment shall be increased to the extent necessary to
ensure that, after the making of such deduction or withholding, the Lender
receives a net sum equal to the sum which it would have received had no
such deduction or withholding been required to be made. The Borrower will
promptly (and in any event within one month of the relevant payment)
provide the Lender with an official receipt of the relevant taxation
authorities for all amounts so deducted or withheld.
<PAGE>
-6-
PART III
--------
GENERAL
-------
7. PURPOSE
-------
The Facility Amount is made available for the general corporate purposes
of the Group.
8. EVENTS OF DEFAULT, COVENANTS, REPRESENTATIONS AND WARRANTIES
------------------------------------------------------------
The events of default, covenants, representations and warranties made by
each Borrower to the Bank are set out in Schedule E.
9. DESIGNATION OF BORROWERS
------------------------
(1) At any time or times during the Drawdown Period, JM may designate as
a Borrower any Subsidiary of JM acceptable to the Bank.
(2) Such designation shall be made by the delivery to the Bank of a
Designation Notice signed on behalf of JM and the Subsidiary named
therein. JM will deliver to the Bank two signed copies of the
Designation Notice together with a Guarantee, relating to such
Subsidiary. The Designation Notice will become effective upon the
return to JM of one copy thereof signed on behalf of the Bank.
(3) JM may, by written notice to the Bank, withdraw the designation of
any Subsidiary as a Borrower hereunder. Such withdrawal shall take
effect forthwith upon payment by that Borrower of all amounts owing
to all Lenders hereunder.
10. DOCUMENTATION AND CONDITION PRECEDENT
-------------------------------------
(1) JM shall deliver the relevant documents as listed in Schedule D
hereto to the Bank, promptly on signature of this Agreement and
promptly on service on the Bank of a Designation Notice.
(2) The obligation of the Bank to allow initial drawdown hereunder by JM
or by a Subsidiary in respect of which a Designation Notice has been
served, is subject to its having first confirmed that it has
received, in form and substance satisfactory to the Bank, the
relevant documents as listed in Schedule D hereto.
11. FINANCIAL INFORMATION
---------------------
(1) JM shall furnish to the Bank:
(a) within 180 days after the end of each of JM's financial
periods, a copy of the Latest Consolidated Accounts made up as
at the last day of that period;
(b) within 180 days after the end of each financial period of a
Borrower, a copy of the report and accounts of that Borrower
relating to that period,
<PAGE>
-7-
(c) a copy of each interim financial statement issued by JM within
seven days after it is issued to the Press;
(d) a copy of every material statement, notice or document issued
by JM to its shareholders within fourteen days after it is so
issued.
(2) In addition, the Bank shall have the right to request from time to
time, further relevant information from JM.
12. ENFORCEMENT
-----------
JM will procure that there is reimbursed to each Lender the amount of any
reasonable costs or expenses incurred by that Lender in the enforcement of
this Agreement or any Guarantee.
13. JUDGMENT CURRENCY
-----------------
JM hereby agrees to indemnify the Lenders upon demand in respect of any
loss suffered as a result of any amount due hereunder in one currency
being paid in another currency pursuant to a judgment or order of a court
of competent jurisdiction. If such payment results in the Lender receiving
more of the currency of the Tranche than is expressed to be due hereunder
the Lender will forthwith refund the excess to or to the order of JM. Any
amount due under this indemnity shall be due as a separate debt
notwithstanding any judgement or order.
14. NOTICES
-------
(1) All notices required hereunder shall be given in writing (which
shall include telex but not facsimile transmissions) except for
notices under Clause 3 (1) hereof which may be given by telephone.
Where any notice is given by telephone a written letter confirming
for evidential purposes the text or content thereof shall be
simultaneously despatched to the addressee(s) thereof.
(2) Notices and other communications to be supplied hereunder shall be
delivered or sent to the addressee at its address as from time to
time notified to the sender.
(3) Any notice or communication to be given hereunder or under the
Guarantee shall be deemed to have been given or made:-
(a) if sent by actual delivery, when despatched or delivered to
the recipient; or
(b) if given by telex when the answerback is received; or
(c) if sent by post within a single country four days after
posting by first class mail; or
(d) if sent by post to an address outside the country of the
sender, ten days after posting by first class mail.
<PAGE>
-8-
(4) Any notice given hereunder shall contain specific reference to this
Agreement.
15. SEVERANCE
---------
If at any time any one or more provisions contained in this Agreement is
or becomes invalid, illegal or unenforceable in any respect under the law
of any applicable jurisdiction, neither the validity, legality or
enforceability of the remaining provisions contained herein nor the
validity, legality or enforceability of such provisions under the law of
any other jurisdiction shall in any way be affected or impaired thereby.
16. APPLICABLE LAW
--------------
English law is the proper law of this Agreement. Each of the parties
hereto (including each of the Borrowers) hereby and for the purposes
hereof submits for itself and in relation to its assets to the non-
exclusive jurisdiction of the English Courts. Each Borrower which does not
have a permanent place of business in England hereby irrevocably
designates, empowers and appoints JM to receive on its behalf service of
process in England in any legal action or proceedings with respect to this
Agreement.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
Signed on behalf of JM by:
in the presence of:
Signed on behalf of the Bank by:
in the presence of:
<PAGE>
-9-
SCHEDULE A
----------
SCHEDULE OF TERMS
-----------------
1. Lenders
-------
For the purposes hereof, the Lenders shall be
(a) [ ] acting through its office at [ ].
(b) such other branch or affiliate of the Bank as the Bank and JM may
from time to time agree.
2. Facility
--------
(1) Subject to the fulfilment of the condition precedent contained in
Clause 10(2) of the Agreement and any reduction notified to the Bank
pursuant to Clause 2(2) of this Agreement, the Bank undertakes to
provide to the Borrower with effect from [ ] ("the Commencement
Date") up to [ ] or the Currency Equivalent thereof in
Dollars or in any other currency which is readily convertible into
Sterling and freely available to the Bank (such Dollars and each such
other currency being an "Optional Currency")
(2) If the Lender and the Borrower agree, the Lender may offer to provide
all or part of the Facility Amount in the form of bills of exchange
accepted by the Lender ("Acceptance Option"). If the Borrower agrees
to draw a Tranche in the form of accepted bills of exchange, the
provisions of paragraph 9 of this Schedule A shall apply.
(3) Drawings hereunder shall not be made for amounts less than five
hundred thousand pounds Sterling ((Pounds)500,000) (or its Optional
Currency equivalent).
(4) Where the Facility Amount is to be cancelled in part in accordance
with Clause 2(2) of this Agreement, the amount cancelled shall be a
multiple of five hundred thousand pounds Sterling ((Pounds)500,000).
3. Commitment Fee
--------------
(1) JM will pay to the Lender a commitment fee in Sterling ("the
Commitment Fee") calculated on a daily basis from the Commencement
Date on the basis of the actual number of days elapsed and a year of
365 days at the rate of [ ] per cent per annum on the difference
between the Facility Amount and the aggregate Sterling equivalent
(calculated on the basis applied at the time each drawing was made or
last renewed) of drawings outstanding under the Loan and the total
face amount of all unmatured bills.
(2) The Commitment Fee will be payable in arrears every six months during
the term of the facility, the first such payment to be made on the
date falling six months from the Commencement Date and the last such
payment on the Repayment Date or on cancellation of the Facility
Amount, if earlier.
<PAGE>
-10-
4. Notice of Drawings
------------------
On any Business Day falling within the Drawdown Period, new Tranches may be
drawn hereunder and any existing Tranche renewed on its Maturity Date,
following receipt by the Lender from a Borrower of notice (which may be in
writing or by telephone to an officer of the Lender notified by the Lender
as being authorised to receive such notice), which shall be received by
11.00am (local time of the Lender concerned), and which shall be
irrevocable unless the Lender otherwise agrees, and effective two Business
Days after receipt or such shorter period as the Borrower and the Lender
may agree. In the case of notices by telephone or telex, the Borrower
agrees to dispatch written confirmation simultaneously to the Lender.
5. Calculation of Interest
-----------------------
(1) Sterling Tranches
-----------------
The annual rate of interest applicable to each Sterling Tranche shall
be computed on the basis of the actual number of days in a 365 day
year and shall be the aggregate of:-
(a) LIBOR for the period of the Interest Period concerned
ascertained by the Bank on the first day of that Interest
Period, plus
(b) a margin at the annual rate of [ ] per cent, plus
(c) an additional margin equal to the annual percentage rate
calculated to three decimal places, determined in good faith
by the Lender as being the cost to the Lender of complying with
the requirements of the Bank of England for the time being in
force in respect of the maintenance of mandatory liquid asset
ratios or the making of special deposits or other similar
requirements during the then current Interest Period (or part
thereof). On or before the Maturity Date of the Tranche the
Lender will inform the Borrower in writing of its calculation
of such additional margin. The determination of this additional
margin shall in the absence of manifest error be binding on the
Borrower.
(2) Tranches denominated in a currency other than Sterling
------------------------------------------------------
(a) With the exception of Tranches drawn under sub-paragraph
5(2)(b) of this Schedule A, the annual rate of interest
applicable to each Tranche denominated in an Optional Currency
shall be computed on the basis of the actual number of days
elapsed and a year of 360 days or 365 days, depending on the
practice from time to time of the London Interbank market
relating to the relevant currency, and shall be the aggregate
of:-
(i) LIBOR for the period of the Interest Period concerned
ascertained by the Bank two Business Days before the
beginning of that Interest Period, plus
(ii) a margin at the annual rate of [ ] per cent.
<PAGE>
-11-
(b) At the Lender's option and where a Lender is able to lend
domestic Dollars, the Lender may also offer such money market
rates as it makes available to its best customers for
borrowings in domestic Dollars, or such other rates of interest
which shall be agreed by the Lender and the Borrower, such
rates to be quoted on an all-in basis.
(3) Determination of LIBOR
----------------------
(a) Where the Lender and Borrower cannot agree upon LIBOR as
defined in Clause 1(1)(b)(viii) of this Agreement, LIBOR shall
equal the arithmetic mean of the offered rates (if any)
appearing at 11:00 a.m. on the first day of the relevant
Interest Period (or in the case of Tranches denominated in a
currency other than Sterling two Business Days before the
beginning of the relevant Interest Period) on:
(i) the LIBP page (in the case of a Sterling Tranche); or
(ii) the LIBO page (in the case of a Tranche denominated in
Dollars); or
(iii) the page containing offered rates of a prime bank
incorporated in the jurisdiction of that currency (in the
case of Tranches to be drawn in any other currency),
in each case, of the Reuters screen for deposits in the currency and
for the Interest Period in which that Tranche is to be drawn (the
"Screen Rate") and a reference as aforesaid to a page of the Reuters
screen includes such other page as may replace that page on that
service or such other service as may replace that service or, if
there is no Screen Rate, the rate per annum at which the Bank was
offering to prime banks in the London interbank market deposits of
the currency and for the amount of the Tranche for the relevant
Interest Period at or about 11:00 a.m. on (or in the case of a
Tranche to be drawn in a currency other than sterling two Business
Days before) the relevant date of drawing.
(b) If the currency of the Tranche is not dealt with in London so that
LIBOR cannot be ascertained the Borrower and Lender shall seek to
agree upon an appropriate rate of interest and, if they cannot so
agree, the notice of drawing or renewal shall be cancelled.
6. Repayment Date
--------------
The whole of the Loan, together with accrued interest thereon then unpaid,
shall be repaid not later than [ ] (the "Repayment Date").
7. Transferability
---------------
(1) The Lender may assign its rights under this Agreement in whole or in
part provided that it receives the prior written consent of JM. If
the Lender wishes to assign its rights to any of its Subsidiaries
such consent will not be unreasonably withheld.
<PAGE>
-12-
(2) No Borrower may assign all or any of its rights or benefits under
this Agreement.
8. Change of Circumstances
-----------------------
(1) The annual rate of interest payable under paragraph 5 of this
Schedule A or the annual rate of Commitment Fee payable under
paragraph 3 of this Schedule A may be increased by such annual rate,
expressed as a percentage to three decimal places, as the Lender may
notify to the Borrower as being necessary to compensate the Lender
for any Change in Circumstances PROVIDED THAT
(a) the Lender shall notify the Borrower in writing of the relevant
Change of Circumstance, the basis on which the increase is
calculated and the date from which it is to be effective;
(b) if such notification is given during and relating to an
Interest Period, the Borrower may repay the Tranche in
accordance with Clause 5(3) of this Agreement;
(c) if such notification is given after the Borrower has given a
notice under paragraph 4 of this Schedule A but before the
Tranche has been advanced, the Borrower may withdraw its said
notice and will not be obliged to borrow the Tranche; and
(d) no amount shall be payable under this paragraph 8 if and to the
extent that it is included in the additional margin referred in
paragraph 5(1)(c) of this Schedule A.
(2) For the purposes of sub-paragraph 8(1) of this Schedule A, "Change in
Circumstances" means any one or more of the following that occurs
after the date of this Agreement except where known at the time of
signing the Agreement and which (or compliance with which) increases
the cost to the Lender or any holding company of the Lender of making
or funding the relevant Tranche or increases the cost to the Bank or
any holding company of the Bank of its commitment to lend hereunder
or reduces any amount received or receivable by the Bank hereunder or
its effective return hereunder on its capital, namely: the
introduction of, or any change in, any relevant law or regulation or
guideline of any competent authority including any requirement or
directive of the Bank of England or the Board of Governors of the
Federal Reserve System, or a change in the official interpretation or
application of any such law, regulation, directive or requirement,
including, without limitation, any reserve or special deposit
requirement, or any tax (other than tax on the Bank's general
income), or any capital requirement. For the avoidance of doubt the
provisions of this paragraph shall not apply to the implementation of
any of the terms of the Statement of Banking Regulations and
Supervisory Practices dated July 1988 and entitled "International
Convergence of Capital measurements and Capital Standards" in the
form agreed at the date of this Agreement.
<PAGE>
-13-
(3) If, at any time, it is unlawful for the Lender to make, fund or
allow to remain outstanding all or any of the Tranches, then the
Lender shall, promptly after becoming aware of the same, deliver to
the Borrower a certificate to that effect and:
(a) the Lender shall not thereafter be obliged to make any
further Tranches and the Facility Amount shall be immediately
reduced to zero; and
(b) if the Lender so requires, the Borrower shall on such date as
the Bank shall specify repay each outstanding Tranche together
with accrued interest thereon and all other amounts owing to
the Lender hereunder.
9. Acceptance Option
-----------------
Rate of Discount and Acceptance Commission
------------------------------------------
(1) If the Lender and Borrower have agreed that a Tranche is to be drawn
in the form of accepted bills of exchange ("Bills"), the Lender
will:
(a) in the case of Bills to be drawn in Dollars ("Dollar Bills"),
inform the Borrower of its annual rate of discount (including
acceptance commission) on the face value of the Bills
applicable for the tenor requested by the Borrower on the
basis of a year of 360 days.
(b) in the case of Bills to be drawn in Sterling ("Sterling
Bills") inform the Borrower of its annual rate of discount
(including acceptance commission) on the face value of the
Bills applicable for the tenor requested by the Borrower on
the basis of a year of 365 days.
Notice of Drawings
------------------
(2) The Borrower shall, at or before 11 a.m. (local time) (or such later
time as the Lender may agree) on the day when the Bills are to be
issued, notify the Lender of the amount and tenor of the Bills to be
accepted and discounted on that day at the rates quoted by the
Lender. In the case of notice by telephone (which must be given by a
duly authorised person) the Borrower agrees to dispatch written
confirmation simultaneously to the Lender.
Currency and Amount
-------------------
(3) (a) Bills drawn hereunder must be denominated either in Sterling
or in Dollars.
(b) Each Sterling Bill shall be drawn by the Borrower on the
Lender in an amount of one hundred thousand pounds Sterling
((Pounds)100,000) or an integral multiple of one hundred
thousand pounds Sterling ((Pounds)100,000) up to a maximum of
five hundred thousand pounds Sterling ((Pounds)500,000), or as
otherwise agreed by the Lender.
<PAGE>
-14-
(c) Each Dollar Bill shall be drawn by the Borrower on the
Lender in an amount of five hundred thousand Dollars
(US$500,000) or one million Dollars (US$1,000,000), or as
otherwise agreed by the Lender.
Other Terms
-----------
(4) Bills shall be:
(a) of a term or tenor of not less than seven days and not more
than 180 days (or such longer period as the Lender may agree)
and ending on or prior to the Repayment Date;
(b) duly signed by the Borrower;
(c) in the case of Sterling Bills, payable to the order of, and
endorsed in blank without qualification by, the Borrower, and
in the case of Dollar Bills payable to the order of the Lender;
and
(d) enfaced with such clausing, and accompanied in the case of
Dollar Bills by such documents, as shall, in the opinion of the
Lender, be reasonably necessary to comply with the requirements
in force at the time of issue concerning the eligibility of
bills of exchange for discount at the Bank of England (in the
case of Sterling Bills) or the New York Federal Reserve Bank
(in the case of Dollar Bills).
Delivery and Indemnity
----------------------
(5) (a) Sterling Bills shall be delivered in London and Dollar
Bills shall be delivered in New York not later than 11
a.m. (local time) on the day on which the Bills are to be
accepted, in each case to the office specified by the
Lender.
(b) To facilitate the prompt performance of this Acceptance Option,
the Borrower may deliver, as required by sub-paragraph 9(5)(a)
of this Schedule A, Bills that have been signed and endorsed by
the Borrower as specified in sub-paragraph 9(4) of this
Schedule A but left blank as regards the date of issue,
maturity date, face amount and clausing. The notice given
pursuant to sub-paragraph 9(2) of this Schedule A shall
therefore contain sufficient information to enable the Bills to
be completed so as to comply with sub-paragraphs 9(3) and 9(4)
of this Schedule A. The giving of such notice shall confer upon
the Lender authority to complete Bills in accordance with the
Borrower's request and the Lender will complete Bills
accordingly.
(c) The Lender acknowledges that it will hold any Bills delivered
in accordance with sub-paragraph 9(5)(b) of this Schedule A as
trustee for the Borrower and accordingly agrees:
(i) to complete such Bills only in accordance with the
instructions of a duly authorised officer of the
Borrower;
<PAGE>
-15-
(ii) to indemnify and hold harmless the Borrower against all
or any proceedings, actions, claims and demands which
may be brought or made against it and all losses,
costs, charges, damages and expenses it may incur or
sustain or for which it may become liable by reason of
the completion of such Bills otherwise than in
accordance with such instructions (as evidenced by the
Borrower's advice to the Lender) or by reason of the
theft, loss, misappropriation, misapplication,
conversion or other unauthorised use of such Bills
whilst in the Lender's possession; and
(iii) on termination of the arrangement specified in
sub-paragraph 9(5)(b) of this Schedule A, or otherwise
when so requested by the Borrower, to cancel all such
unused Bills in the Lender's possession and return them
to the Borrower.
Discounting and Proceeds
-----------------------
(6) (a) Provided that Bills, delivered in accordance with
sub-paragraph 9(5)(a) of this Schedule A or completed in
accordance with sub-paragraph 9(5)(b) of this Schedule A,
comply with sub-paragraphs 9(3) and 9(4) of this Schedule A,
the Lender will accept them and will promptly attend to the
discounting thereof and the disposal of the net proceeds
(after deducting acceptance commission) in accordance with the
Borrower's instructions.
(b) Discount charges, stamp duty (if any) and all expenses
relating to the Acceptance Option are for the account of the
Borrower.
Repayment
---------
(7) On or before the maturity of any Bills accepted by the Lender
hereunder, the Borrower shall pay to the Lender in cleared funds an
amount equal to their face value. Alternatively, with the agreement
of the Lender, the Borrower may arrange for the issue of fresh Bills
whose net proceeds will be applied towards the discharge of the
maturing Bills.
Procedure following an Event of Default
---------------------------------------
(8) On the occurrence of an event of default as specified in paragraph 6
of Schedule E the Bank shall be free to require the Borrower
(whereupon the Borrower shall be so bound) forthwith to place a cash
deposit with the Lender or a subsidiary of the Bank. This is to be
denominated in the currency of the indebtedness in an amount equal
to 100% of the aggregate maximum liability of the Lender under each
Bill then outstanding. It is to be credited to a provisions for
engagements account on terms that such deposit is not payable to the
Borrower or as it shall direct unless and until the Lender is
discharged from each such obligation arising from accepted bills and
then only to the extent to which the Lender has not been called upon
to make payments thereunder.
<PAGE>
-16-
SCHEDULE B
----------
DESIGNATION NOTICE
------------------
To: [ ]
Date:
We, JOHNSON MATTHEY PLC ("JM"), hereby pursuant to Clause 9 of the Core
Revolving Credit Facility Agreement dated [ ] ("the Loan Agreement")
designate [Name, country of incorporation and address of Subsidiary]
("Borrower") to be a Borrower for the purpose of the Loan Agreement.
The Borrower hereby:
(i) agrees to perform and be bound by all the terms of the Loan
Agreement, as for the time being in force, insofar as they are the
obligations of a Borrower thereunder;
(ii) authorises JM to make or agree to such alterations to the Loan
Agreement as it may from time to time think fit provided that
no such alteration shall adversely affect any then existing
obligation of the Borrower thereunder;
(iii) acknowledges that the Bank shall be entitled without enquiry
to assume, as against the Borrower, that any alteration to the
Loan Agreement made or agreed to by JM does not adversely
affect any of the existing obligations of the Borrower
thereunder and that the Borrower is bound thereby.
JM undertakes to notify the Borrower of any alteration hereafter made to the
Loan Agreement.
Signed on behalf of JOHNSON MATTHEY PLC by:
Signed on behalf of the Borrower by:
On duplicate
------------
We hereby acknowledge receipt of the foregoing notice and confirm that [name of
Borrower] is henceforth a Borrower as defined in the Loan Agreement.
Dated
Signed on behalf of [the Bank] by:
<PAGE>
-17-
SCHEDULE C
----------
GUARANTEE
---------
In consideration of [ ] ("the Bank") agreeing at the request of JOHNSON
MATTHEY PLC ("JM") to advance moneys to [Name of Borrower] (the "Borrower") in
accordance with the Core Revolving Credit Facility Agreement as the same may be
amended from time to time dated [ ] (hereinafter called the "Loan
Agreement") JM hereby unconditionally and irrevocably guarantees to the Bank the
punctual payment when due of all obligations of the Borrower to any Lender now
or hereafter existing under the Loan Agreement ("Obligations").
1. Therefore, if the Borrower fails to pay any sum as aforesaid JM shall,
forthwith on written demand by the Bank, pay to the Lender without any
set-off or counterclaim (and gross up where necessary) the amount which
the Borrower has failed to pay so that the Lender shall receive the same
amount as would have been received had such sum been duly paid by the
Borrower.
2. The Borrower shall (without prejudice to the generality of the foregoing)
be deemed to have failed to pay any sum due if and to the extent that a
payment to the Lender by the Borrower is avoided or reduced by virtue of
any provisions or enactments relating to bankruptcy, liquidation or
insolvency for the time being in force.
3. JM's liability under this Guarantee shall be unconditional irrespective
of:-
(1) any lack of enforceability of any Obligation;
(2) any change of the time, manner or place of payment, or any other
term of any Obligation or any indulgence granted to the Borrower;
(3) any exchange, release, or non-perfection of any collateral securing
payment of any Obligation;
(4) any law, regulation or order of any jurisdiction affecting any term
of any Obligation or the Lender's with respect thereto; and
(5) any other circumstances which might otherwise constitute a defence
available to, or a discharge of, a borrower or a guarantor;
whether or not any of the foregoing is known to JM.
4. Without prejudice to the rights of the Bank or any Lender against the
Borrower as a principal debtor, JM shall be deemed to be a principal
debtor in respect of the Borrower's Obligations hereunder and not merely a
surety. Accordingly JM shall not be discharged nor shall JM's liability be
affected by any act, thing, omission or means whatever whereby JM's
liability would not have been discharged if JM had been a principal
debtor.
5. JM hereby waives promptness, diligence, and notices with respect to any
Obligation and this Guarantee and any requirement that a Lender exhausts
any right to take action against the Borrower.
<PAGE>
-18-
6. If any money shall be paid by JM hereunder in respect of the Obligations
of the Borrower, then until all the Obligations of the Borrower to the
Lender shall have been paid in full JM will not:-
(1) exercise for its benefit any subrogated rights against the Borrower
in respect of its Obligations; nor
(2) seek to enforce any rights against the Borrower to recover moneys
paid by JM in respect of its Obligations; nor
(3) prove in competition with the Lender in any liquidation or
winding-up of the Borrower in respect of moneys paid by JM in
respect of its Obligations.
7. The certificate of a duly authorised officer of the Bank as to the amount
outstanding from the Borrower shall in the absence of manifest error be
conclusive evidence thereof for all the purposes of this Guarantee.
8. This is a continuing guarantee for the full amount of the Obligations and
shall remain in full force and effect until all Obligations have been
irrevocably paid and satisfied in full.
9. This Guarantee shall be governed by English law.
10. Words and expressions defined in the Loan Agreement shall bear the same
meanings in this Guarantee.
IN WITNESS whereof this Guarantee has been signed as a deed by Johnson Matthey
PLC acting by a director and its secretary or two directors.
Director
Director/Secretary
<PAGE>
-19-
SCHEDULE D
----------
DOCUMENTATION REQUIRED ON SIGNATURE OF THIS AGREEMENT
-----------------------------------------------------
1. A copy, certified as complete and up-to-date of the Memorandum & Articles
of Association of JM.
2. Copy of Latest Consolidated Accounts of JM.
3. Certified copy of Resolution of the Finance and Administration Committee
of the Board of JM authorising signature of this Agreement.
4. Certified list of the persons authorised to sign notices and other
documents in connection with this Agreement and their specimen signatures.
DOCUMENTATION REQUIRED FOLLOWING DESIGNATION OF A BORROWER
----------------------------------------------------------
1. From JM:
(1) Certified copy of the Resolution of the Finance and Administration
Committee of the Board authorising signature of the Designation
Notice and authorising execution of the Guarantee.
(2) The Guarantee.
2. From the Borrower:
(1) Certified copy of Board Resolution authorising signature of the
Designation Notice.
(2) Certified copy of Certificate of Incorporation and Memorandum and
Articles of Association (or their equivalent under the laws of its
country or state of incorporation).
(3) Certified list of the persons authorised to sign notices and other
documents in connection with this Agreement and their specimen
signatures.
(4) Certification by a suitably qualified legal adviser that the
Agreement constitutes legal valid and binding obligations of the
Borrower enforceable against it in accordance with its terms.
Note: When any of the foregoing documents has already been delivered to the
Bank, the relevant company may deliver to the Bank a certificate, signed
by one of its officers, to the effect that such document remains unchanged
and in full force and effect.
<PAGE>
-20-
SCHEDULE E
----------
EVENTS OF DEFAULT, COVENANTS, REPRESENTATIONS AND WARRANTIES
------------------------------------------------------------
1. Definitions
-----------
"Bank" means [ ] or its assigns.
----
"Borrower" means JM and any Subsidiary of JM in respect of which JM has
--------
given and not withdrawn a Designation Notice.
"Borrowings" means (without double counting and excluding the following so
----------
far as they relate to borrowings or pecuniary liabilities from one member
of the Group to another member of the Group):
(1) moneys borrowed or raised (including without limitation the Capital
Value of all Finance Leases);
(2) any pecuniary liabilities under any debenture, note or other security
or under acceptance credit facilities (not being acceptances in
relation to the purchase of goods in the ordinary course of
business);
(3) pecuniary obligations determined by reference to a specified quantity
of Precious Metal under Precious Metal Leases.
(4) pecuniary liabilities under any guarantee or other legally
enforceable assurance against financial loss in respect of moneys
referred to in paragraphs (1) to (3) above borrowed or raised, or any
other obligation referred to therein; including in all cases
interest, interest margin and similar payments which are due and
payable in respect thereof.
"Business Day" means a day on which banks and the relevant financial
------------
markets are open for the transaction of the business contemplated by this
Agreement, and if a notice or other communication is to be delivered
hereunder, a day on which banks are open for business in the place(s) in
which such notice or other communication is to be received.
"Capital Value" means in respect of any Finance Lease the capital value
-------------
thereof as determined pursuant to the relevant UK Statements of Standard
Accounting Practice.
"Document" means this Agreement and any other documents executed pursuant
--------
thereto.
"Encumbrance" means any mortgage, pledge, lien, charge, assignment,
-----------
hypothecation, security interest, title retention, preferential right or
trust arrangement and any other security agreement or arrangement, but (for
the avoidance of doubt) excluding:
(i) any purported encumbrance until beneficial title to the alleged
subject matter of the purported encumbrance has been acquired by the
relevant member of the Group; or
<PAGE>
-21-
(ii) any encumbrance or purported encumbrance over a leased asset (other
than any asset owned at the date hereof leased under a Finance Lease)
in favour of the lessor thereof.
"Finance Lease" means a lease determined to be a finance lease for the
-------------
purposes of relevant UK Statements of Standard Accounting Practice.
"Financial Accommodation" means the credit facilities provided under the
-----------------------
terms of this Agreement and shall include accommodation denominated in or
by reference to any currency or Precious Metal.
"JM" means Johnson Matthey PLC.
--
"Group" means JM and those of its Subsidiaries whose accounts are dealt
-----
with in the Latest Consolidated Accounts.
"Latest Consolidated Accounts" means at any date the most recently
----------------------------
published audited consolidated accounts of the Group.
"Money Market Investment" means any money market instrument subject to the
-----------------------
supervision of the Bank of England's Wholesale Markets Supervision
Division.
"Net Borrowings" means the aggregate amount of all Borrowings of the Group
--------------
outstanding at the relevant time less the aggregate of any cash balances
and deposits of the Group and the market value of any readily realisable
short term Money Market Investments or UK or US government securities and
precious metal stocks to the extent that such stocks are funded by Precious
Metal Leases.
"Net Interest Costs" means, in respect of any period, the sum charged as
------------------
net interest payable (if any) in the Latest Consolidated Accounts of the
Group.
"Net Worth" means (without double counting) the amount for the time being
---------
paid up or credited as paid up on the issued share capital of JM plus the
consolidated reserves of the Group (including, without limitation, the
share premium account) plus the consolidated retained earnings of the Group
(or less the amount standing to the debit of the consolidated profit and
loss account of the Group) plus the Group's proportion of associated
companies' reserves less any amount included in the above which is
attributable to (i) goodwill and other intangibles (calculated in
accordance with relevant UK accounting principles) (ii) minority interests
and (iii) deferred taxation (if not already deducted in the computation of
net worth), all as shown in the Latest Consolidated Accounts but adjusted
as may be necessary in respect of any variation in the paid up share
capital or share premium account of JM to reflect the issue of shares for
cash since the date of the Latest Consolidated Accounts.
"Precious Metals" means gold, silver, platinum, palladium, rhodium,
---------------
iridium, ruthenium and osmium.
<PAGE>
-22-
"Precious Metal Lease" means a lease treated by the Borrower as a precious
--------------------
metal lease for the purposes of the Latest Consolidated Accounts or which,
if entered into since the date of the Latest Consolidated Accounts, would
have been so treated by the Borrower for the purposes of the Latest
Consolidated Accounts had it been entered into before the date of the
Latest Consolidated Accounts.
"Profit before Interest and Tax" means, in respect of any period, the
------------------------------
consolidated profit of the Group before charging Net Interest Costs, and
tax excluding (to the extent included therein) amounts attributable to
exceptional or extraordinary items and all accumulated consolidated losses
from previous financial periods all as shown in, or on the basis of, the
audited profit and loss account of the Group for such period.
"Relevant Subsidiary" means any Subsidiary of JM whose net tangible assets
-------------------
at the relevant time amount to a figure in excess of 10% of Net Worth.
"Subsidiary" has the meaning attributed to it by Section 736 of The
----------
Companies Act 1985 as amended.
2. Financial Covenants
-------------------
The Borrower undertakes to the Bank that it will procure that:
(1) Net Worth: Net Worth at the date of and as shown by the Latest
---------
Consolidated Accounts of the Group shall not be less than (Pounds)200
million.
(2) Net Borrowings/Net Worth: the ratio of Net Borrowings to Net Worth at
------------------------
the date of and as shown by the Latest Consolidated Accounts shall
not exceed 1.5 to 1; and
(3) Interest Cover: the ratio of Profit before Interest and Tax to Net
--------------
Interest Costs in each financial year of the Group as shown by the
Latest Consolidated Accounts shall not be less than 2 to 1.
3. Calculation of Financial Covenants
----------------------------------
JM shall within two weeks of the publication of the annual report
containing the Latest Consolidated Accounts of the Group produce and
deliver to the Bank computations for the purposes of each of the financial
covenants referred to in paragraph 2 of this Schedule E. Any determination
by the auditors of JM on any computation of the financial covenants shall
in the absence of manifest error be final and binding.
4. General Covenants
-----------------
JM (and the Borrower where JM is not the Borrower) undertakes with the Bank
that:
(1) Status It will procure that it will do or cause to be done all
------
things necessary to keep in full force and effect its corporate
existence.
(2) Maintenance of consents It will maintain all material rights and
-----------------------
consents necessary for the performance of its obligations under any
Document.
<PAGE>
-23-
(3) Notification of relevant events It will notify the Bank of the
-------------------------------
occurrence of any event of default listed at paragraph 6 of this
Schedule E.
(4) Pari passu ranking It undertakes that its obligations under any
------------------
Document do and will rank at least pari passu with all its other
present and future Borrowings other than Borrowings which are subject
to an Encumbrance or represent obligations preferred by law in any
relevant jurisdiction.
(5) Limit on security for Borrowings It will procure that Encumbrances
--------------------------------
affecting the whole or any part of the present or future assets of
the Group will not be created or permitted to subsist or arise by any
member of the Group as security for Borrowings where the amount of
Borrowings secured by all such Encumbrances exceeds an amount equal
to 20% of Net Worth at the relevant time provided that Encumbrances
permitted to subsist by any company which becomes a Subsidiary after
the date hereof and which were created neither after such company
became such a Subsidiary nor in contemplation of such company
becoming such a Subsidiary shall not be taken into account for the
purposes of determining whether such amount shall have been exceeded.
5. Representations and Warranties
------------------------------
Subject to any matter to the contrary expressly and directly disclosed in
the audited consolidated accounts of the Group for the year ended 31 March
1992 and the accompanying report of the directors of JM and subject further
to any matter disclosed in writing to the Bank prior to the date hereof
each of the Borrowers represent and warrant that:
(1) Status It is duly organised and validly existing, possessing
------
perpetual corporate existence and the capacity to sue or be sued in
its own name and each member of the Group has the power to own its
property and assets and carry on its business as it is now being
conducted.
(2) Powers and authority It has the power to enter into and perform each
--------------------
Document and the transactions contemplated thereby and has taken all
necessary action to authorise the entry into and performance of each
Document and the transactions contemplated thereby.
(3) Legal validity Each Document constitutes legal, valid and binding
--------------
obligations and would be so treated in the courts of England and the
courts of its incorporation (if different) and is in proper form for
its enforcement in all such courts.
(4) Non-conflict with laws The entry into each Document does not and the
----------------------
performance of each Document and the transactions contemplated
thereby will not conflict with (i) any law or regulation or any
official or judicial order; or (ii) its Memorandum and Articles of
Association or other constitutional documents of itself or its
Subsidiaries; or (iii) any agreement or document to which it or any
of its Subsidiaries is a party or which is binding upon any of them
or any of their respective assets and which is material to its
business, assets or financial condition, nor result in the creation
or imposition of any Encumbrance on any of their respective assets
pursuant to the provisions of any such agreement or document.
<PAGE>
-24-
(5) No default No event has occurred and is continuing and has not been
----------
waived which constitutes a default under paragraph 6 of this Schedule
E nor any event which, with the giving of notice or the lapse of time
or both, would constitute such a default.
(6) Consents All authorisations, approvals, consents, licences,
--------
exemptions, filings, registrations, notarisations and other matters,
official or otherwise, required in connection with the entry into,
validity and enforceability of each Document and the transactions
contemplated thereby have been obtained or effected and are in full
force and effect.
(7) Pari passu ranking Its obligations hereunder rank at least pari
------------------
passu with all its other Borrowings which are not subject to an
Encumbrance, except preferential obligations applicable generally to
companies in the jurisdiction in which it is incorporated or carries
on business.
(8) Litigation There is no litigation or administrative proceeding
----------
current, threatened or pending in any Court or by any governmental
authority against any member of the Group such as is likely
materially to impair the ability of JM or any Borrower to perform
their respective obligations under this Agreement. JM undertakes to
advise the Bank promptly upon any such litigation or administrative
proceeding coming to its notice.
(9) Material Adverse Change There has been no material adverse change in
-----------------------
its financial position which is reasonably likely to affect
materially and adversely the ability of the Borrower and JM to comply
with their obligations hereunder.
The representations and warranties referred to above shall survive the
execution of the Document and the provision of any Financial Accommodation
hereunder and those contained in the following sub-paragraphs of this
Schedule E: 5(1), 5(2), 5(3), 5(4), 5(5), 5(6), 5(7) and 5(9) (and no
others), shall be deemed to be repeated at the time of the drawing or
renewal of any advance pursuant to the terms of this Agreement.
6. Events of Default
-----------------
(1) Subject to sub-paragraph 6(2) of this Schedule E, the Bank shall be
under no obligation to make advances to any Borrower, and the Bank
may by written notice to all Borrowers and JM demand immediate
repayment of any amounts then outstanding under the Financial
Accommodation if any of the events set out below ("Event") occurs in
relation to this Agreement, namely:
(a) Failure to pay money A Borrower fails to pay any sum due to a
--------------------
Lender hereunder on the due date and neither that Borrower nor
JM (if not the Borrower) pays the same within five Business
Days after written demand by the Lender sent to the Borrower
and JM; or
(b) Failure to comply with other provisions A Borrower or JM fails
---------------------------------------
to comply with any other provision of any Document and such
failure remains unremedied for thirty days after the Lender has
given written notice to the relevant Borrower and JM specifying
the breach concerned; or
<PAGE>
-25-
(c) Representations incorrect Any representation, warranty or
-------------------------
statement made or deemed to be repeated in any Document or in
any accounts, certificate, statement or opinion delivered by a
Borrower or JM or on its or their behalf or in connection
therewith is incorrect in any material respect when made or
deemed to be repeated; or
(d) Other Borrowings
----------------
(i) Any other individual Borrowings of JM or a Relevant
Subsidiary for an amount exceeding (Pounds)5 million (or
its equivalent in another currency or currencies as at
the relevant date), or any two or more Borrowings by JM
or a Relevant Subsidiary for an aggregate amount
exceeding the above sum, becomes prematurely due and
payable as a result of a default; or
(ii) Any such Borrowing or Borrowings or any sum payable in
respect thereof is not paid when due or within any
applicable period of grace provided for by agreement
prior to the due date for such payment; or
(e) Liquidation etc Any order is made or resolution passed or
---------------
other action taken for the suspension of payments or
dissolution, termination of existence, liquidation, winding-up,
administration or bankruptcy of a Borrower or JM or any
Relevant Subsidiary, except pursuant to any voluntary solvent
reorganisation whereby the assets and business of the relevant
company are transferred to another member of the Group or any
other re-organisation previously approved in writing by the
Bank (such approval not to be unreasonably withheld); or
(f) Moratorium or arrangement A moratorium in respect of all or
-------------------------
any debts of a Borrower or JM or any Relevant Subsidiary, a
composition or an arrangement with creditors of a Borrower or
JM or any Relevant Subsidiary or any other proceeding or
arrangement by which the assets of any such company are
submitted to the control of its creditors is ordered or
declared; or
(g) Liquidator and receiver A liquidator, trustee, administrator,
-----------------------
receiver, administrative receiver, manager or similar officer
is appointed in respect of a Borrower or JM or any Relevant
Subsidiary or in respect of all or any material part of their
respective assets; or
(h) Insolvency A Borrower or JM or any Relevant Subsidiary is
----------
declared insolvent or is unable, or admits in writing its
inability, to pay its debts as they fall due or becomes
insolvent within the terms of any applicable law and for the
purposes of determining whether any such company has become
insolvent indebtedness to other members of the Group shall be
ignored; or
<PAGE>
-26-
(i) Distress or execution: Any distress, execution or attachment
----------------------
affects any material asset of a Borrower or JM or any Relevant
Subsidiary in respect of a material claim and remains
undischarged for a period of thirty days; or
(j) Analogous events: Anything analogous to or having a
-----------------
substantially similar effect to any of the Events specified in
sub-paragraphs 6(e) to 6(i) of this Schedule E above shall
occur under the laws of any applicable jurisdiction and which
in the case of sub-paragraph 6(i) of this Schedule E shall be
reasonably likely in the reasonable opinion of the Bank to
affect materially and adversely the ability of JM and a
Borrower to comply with its obligations hereunder; or
(k) Authorisations and consents: Any authorisation, approval,
----------------------------
consent, licence, exemption, filing, registration or
notarisation or other requirement necessary to enable a
Borrower or JM to comply with any of its obligations under any
Document is materially and adversely modified, revoked or
withheld or does not remain in full force and effect and is
not renewed or substantially replaced, provided that if
reasonably satisfactory arrangements have been or will be made
within a reasonable period of time for the resolution of such
matters (including, without limitation, a change in Borrower)
this sub-paragraph (k) shall not apply; or
(l) Illegality: At any time it is unlawful for a Borrower or JM
-----------
to perform any of its obligations under any Document, provided
that if satisfactory arrangements have been or will be made
within a reasonable period of time for the resolution of such
matters (including, without limitation, a change in Borrower)
this sub-paragraph (l) shall not apply; or
(m) Status of Subsidiary: A Borrower ceases to be a Subsidiary of
---------------------
JM; or
(n) Guarantee: Any Guarantee given by JM under this Agreement in
----------
relation to a Borrower ceases to be in full force and effect;
or
(o) Financial Condition: The financial condition of the Group does
--------------------
not satisfy the requirements of paragraph 2 of this
Schedule E.
(2) The rights of the Bank on the occurrence of an Event under this
paragraph 6 shall not be exercisable and the Event shall be deemed
not to be an event of default:
(a) in consequence of an event that has ceased to exist; or
(b) if the Bank or Lender consents in writing to the occurrence of
the Event or waives its rights arising in consequence thereof;
or
(c) in relation to any Borrower other than the Borrower to which
the Event applies where such Event has arisen under sub-
paragraphs 6(1)(c) (provided that the Borrower is not JM) or
6(1)(m) or 6(1)(n) of this Schedule E; or
<PAGE>
-27-
(d) where an Event has occurred other than under those
sub-paragraphs specified in sub-paragraph 6(2)(c) of this
Schedule E in relation to a Borrower which is not JM or a
Relevant Subsidiary and if and for so long as JM in such case
duly and promptly performs its obligations under the Guarantee
given in respect of that Borrower save that the Bank shall not
be obligated to make any new advance or to renew any existing
advance on its Maturity Date in respect of that Borrower.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
COMMITTED FACILITIES
-------------------------------------------
-------------------------------------------
Core Revolving Credit Facilities
-------------------------------------------
(POUND) MILLIONS
BANK Signing Facility Amount Drawn Amount Available Margin Maturity
---- ------- -------- ------------ ---------------- ------ --------
Date Amount 31 Jul 95 31 Jul 95 (b.p.) Date
---- ------ --------- --------- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Bank Brussels Lambert 09-Oct-92 @ 40.0 11.8 28.2 25.0 05-Jul-96
Bank of Nova Scotia 30-Sep-92 25.0 12.5 12.5 30.0 30-Sep-99
17-Jul-95 17.0 0.0 17.0 25.0 17-Jul-97
Canadian Imperial Bk. of Commerce 07-Oct-92 20.0 13.6 6.4 30.0 16-Mar-2000
17-Jul-95 20.0 0.0 20.0 25.0 17-Jul-97
Lloyds Bank Plc 18-Dec-92 40.0 0.0 40.0 25.0 17-Jul-98
Midland Bank Plc 06-Mar-95 20.0 0.0 20.0 30.0 16-Mar-2000
23-Aug-93 10.0 9.5 0.5 22.0 15-Mar-96
17-Jul-95 20.0 0.0 20.0 25.0 17-Jul-97
National Westminster Bank Plc 18-Dec-92 37.0 10.4 26.6 20.0 17-Jul-97
Royal Bank of Canada 05-Oct-92 20.0 9.4 10.6 27.5 16-Mar-2000
17-Jul-95 17.0 0.0 17.0 15.0 17-Jul-97
The Sumitomo Bank, Limited 26-Feb-93 + 14.3 10.7 3.6 27.5 16-Mar-98
17-Jul-95 17.0 0.0 17.0 25.0 17-Jul-97
Westpac Banking Corporation 06-Jun-95 25.0 0.0 25.0 30.0 16-Mar-2000
25-Aug-93 10.0 2.9 7.1 25.0 25-Aug-96
17-Jul-95 25.0 0.0 25.0 25.0 17-Jul-97
--------------------------------------------------------------------------------------------------------------------------
TOTAL 377.3 80.8 296.5 25.4(avg.)
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Yen 2,000 million at 140
@ Although maturity date shown as 5 July 1996, JM can draw down for 12 months at
any time up to maturity date.
28
<PAGE>
EXHIBIT (c)
AGREEMENT AND PLAN OF MERGER
among
JOHNSON MATTHEY PUBLIC LIMITED COMPANY
ACI ACQUISITION CORPORATION
and
ADVANCE CIRCUITS, INC.
Dated as of August 14, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C> <C>
THE TENDER OFFER........................... 2
Section 1.1 The Offer............................................. 2
---------
Section 1.2 Company Action........................................ 3
--------------
ARTICLE II
THE MERGER.............................. 5
Section 2.1 Effective Time of the Merger.......................... 5
----------------------------
Section 2.2 Closing............................................... 6
-------
Section 2.3 Effects of the Merger................................. 6
---------------------
Section 2.4 Articles of Incorporation and By-Laws................. 6
-------------------------------------
Section 2.5 Directors............................................. 7
---------
Section 2.6 Officers.............................................. 7
--------
ARTICLE III
CONVERSION OF SECURITIES; DISSENTING SHARES............. 7
Section 3.1 Conversion of Capital Stock........................... 7
---------------------------
Section 3.2 Exchange of Certificates.............................. 8
------------------------
Section 3.3 No Further Ownership Rights in Company Common Stock... 9
---------------------------------------------------
Section 3.4 Closing of Company Transfer Books..................... 9
---------------------------------
Section 3.5 Withholding........................................... 9
-----------
Section 3.6 Dissenting Company Common Stock....................... 10
-------------------------------
Section 3.7 Lost, Stolen or Destroyed Certificates................ 10
--------------------------------------
Section 3.8 Further Assurances.................................... 10
------------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............ 11
Section 4.1 Organization.......................................... 11
------------
Section 4.2 Capitalization........................................ 12
--------------
Section 4.3 Authority............................................. 13
---------
Section 4.4 Consents and Approvals; No Violations................. 13
-------------------------------------
Section 4.5 SEC Reports and Financial Statements.................. 15
------------------------------------
Section 4.6 Information in Disclosure Documents................... 16
-----------------------------------
Section 4.7 Litigation............................................ 16
----------
Section 4.8 No Material Adverse Change............................ 16
--------------------------
Section 4.9 Taxes................................................. 17
-----
Section 4.10 Benefit Plans......................................... 18
-------------
Section 4.11 Opinion of Financial Advisor.......................... 21
----------------------------
Section 4.12 Certain Antitakeover Provisions Not Applicable........ 21
----------------------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 4.13 Intellectual Property................................. 21
---------------------
Section 4.14 Government Contracting Matters........................ 22
------------------------------
Section 4.15 Votes Required........................................ 24
--------------
Section 4.16 Brokers............................................... 24
-------
Section 4.17 Certain Agreements.................................... 24
------------------
Section 4.18 Environmental Compliance.............................. 25
------------------------
Section 4.19 Contracts............................................. 25
---------
Section 4.20 New Directors......................................... 26
-------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........... 26
Section 5.1 Organization.......................................... 26
------------
Section 5.2 Authority............................................. 26
---------
Section 5.3 Consents and Approvals; No Violations................. 27
-------------------------------------
Section 5.4 Operations of Sub..................................... 28
-----------------
Section 5.5 Information in Disclosure Documents................... 28
-----------------------------------
Section 5.6 Financing............................................. 28
---------
Section 5.7 Brokers............................................... 28
-------
ARTICLE VI
COVENANTS.............................. 28
Section 6.1 Conduct of Business of the Company.................... 28
----------------------------------
Section 6.2 Reasonable Best Efforts............................... 31
-----------------------
Section 6.3 Access to Information................................. 31
---------------------
Section 6.4 Company Shareholders Meeting.......................... 32
----------------------------
Section 6.5 Company Option Plan................................... 33
-------------------
Section 6.6 Company Benefit Plans................................. 34
---------------------
Section 6.7 No Solicitation....................................... 34
---------------
Section 6.8 Fees and Expenses..................................... 35
-----------------
Section 6.9 Notification of Certain Matters....................... 36
-------------------------------
Section 6.10 Company Debt Agreements............................... 37
-----------------------
Section 6.11 Public Announcements.................................. 37
--------------------
Section 6.12 State Takeover Laws................................... 37
-------------------
Section 6.13 Indemnification....................................... 38
---------------
Section 6.14 Shareholder Litigation................................ 38
----------------------
ARTICLE VII
CONDITIONS.............................. 38
Section 7.1 Conditions to Each Party's Obligation To
----------------------------------------
Effect the Merger.................................... 38
-----------------
Section 7.2 Conditions to Obligations of Parent and Sub........... 39
-------------------------------------------
Section 7.3 Conditions to Obligations of the Company.............. 40
----------------------------------------
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VIII
TERMINATION............................. 40
Section 8.1 Termination........................................... 40
-----------
Section 8.2 Effect of Termination................................. 42
---------------------
ARTICLE IX
MISCELLANEOUS............................ 42
Section 9.1 Nonsurvival of Representations and Warranties......... 42
---------------------------------------------
Section 9.2 Amendment............................................. 42
---------
Section 9.3 Extension; Waiver..................................... 42
-----------------
Section 9.4 Notices............................................... 42
-------
Section 9.5 Interpretation........................................ 44
--------------
Section 9.6 Counterparts.......................................... 44
------------
Section 9.7 Entire Agreement; No Third Party Beneficiaries........ 44
----------------------------------------------
Section 9.8 Governing Law......................................... 45
-------------
Section 9.9 Specific Performance.................................. 45
--------------------
Section 9.10 Assignment............................................ 45
----------
Section 9.11 Validity.............................................. 45
--------
Section 9.12 Parent Guarantee and No Solicitation Agreement........ 45
----------------------------------------------
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 14, 1995 (this
"Agreement"), among JOHNSON MATTHEY PUBLIC LIMITED COMPANY, an English public
---------
limited company ("Parent"), ACI ACQUISITION CORPORATION, a Minnesota corporation
------
and an indirect, wholly-owned subsidiary of Parent ("Sub"), and ADVANCE
---
CIRCUITS, INC., a Minnesota corporation (the "Company"; together with Sub, the
-------
"Constituent Corporations").
------------------------
W I T N E S S E T H:
--------------------
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have determined that the acquisition of the Company by Parent upon the
terms and subject to the conditions of this Agreement would be advantageous and
beneficial to their respective corporations and that such transaction is
consistent with and in furtherance of such entities' respective long-term
business strategies;
WHEREAS, in furtherance thereof, it is proposed that Sub will make a
tender offer (as it may be amended from time to time as permitted hereunder, the
"Offer") to purchase all the outstanding shares of the Company's common stock,
-----
par value $0.10 per share (the "Company Common Stock"), for $22.50 per share of
--------------------
Company Common Stock (such amount, or any greater amount per share offered
pursuant to the Offer, being hereinafter referred to as the "Per Share Amount"),
----------------
net to the seller in cash, in accordance with the terms and subject to the
conditions provided herein and in the Offer Documents (as defined in
Section 1.1(b)); and the Board of Directors of the Company and the Special
--------------
Committee (as defined below) have adopted resolutions approving this Agreement,
the Offer and the Merger (as defined below) and recommending that the Company's
shareholders accept the Offer and approve the Merger; and
WHEREAS it is proposed that, following the consummation of the Offer,
there be a merger (the "Merger") of Sub with and into the Company (the
------
"Surviving Corporation") upon the terms and subject to the conditions hereof.
---------------------
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
-1-
<PAGE>
ARTICLE I
THE TENDER OFFER
Section 1.1 The Offer.
---------
(a) Provided that this Agreement has not been terminated in
accordance with Section 8.1, Sub will, and Parent will cause Sub to, commence
-----------
the Offer as promptly as practicable after the date hereof, but in no event
later than the fifth business day after the date of initial public announcement
of this Agreement and the Offer. The obligation of Sub to, and of Parent to
cause Sub to, commence the Offer and accept for payment, and pay for, any shares
of Company Common Stock tendered pursuant to the Offer will be subject only to
the satisfaction of the conditions set forth in Annex I hereto (any of which may
be waived by Sub in its sole discretion) and to the terms and conditions of this
Agreement. Sub expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company (unless the Company takes any
action permitted to be taken pursuant to the second sentence of Section 6.7(b)),
--------------
Sub shall not (i) reduce the number of shares of Company Common Stock subject to
the Offer, (ii) reduce the Per Share Amount, (iii) modify or add to the
conditions set forth in Annex I (other than to waive any conditions to the
extent permitted by this Agreement), (iv) except as provided in the next
sentence, extend the Offer or (v) change the form of consideration payable in
the Offer. Notwithstanding the foregoing, Sub may, without the consent of the
Company, (i) extend the Offer if at the scheduled expiration date of the Offer
any of the conditions to Sub's obligation to purchase shares of Company Common
Stock shall not be satisfied until such time as such conditions are satisfied or
waived, (ii) extend the Offer for any period required by any order, decree or
ruling of, or any rule, regulation, interpretation or position of, any
Governmental Entity (as defined in Section 4.4(a)) applicable to the Offer and
--------------
(iii) extend the Offer for any reason for a period of not more than five
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence. The Offer will be made by
means of an offer to purchase (the "Offer to Purchase") and related letter of
-----------------
transmittal containing the terms set forth in this Agreement and the conditions
set forth in Annex I hereto. Subject to the terms of the Offer and this
Agreement and the satisfaction or waiver of all the conditions of the Offer set
forth in Annex I hereto as of the final expiration date of the Offer, Sub will,
and Parent will cause Sub to, accept for payment and pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer as
soon as practicable after such expiration date.
(b) On the date of commencement of the Offer, Parent and Sub will
file with the Securities and Exchange Commission (the "SEC") a Tender Offer
---
Statement on Schedule 14D-1 (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1
--------------
will contain (including as an exhibit) or will incorporate by reference the
Offer to Purchase (or portions thereof) and
-2-
<PAGE>
forms of the related letter of transmittal and summary advertisement (which
Schedule 14D-1, Offer to Purchase, and other documents pursuant to which the
Offer will be made, together with any supplements or amendments thereto, are
referred to herein collectively as the "Offer Documents"). Parent and Sub will
---------------
disseminate the Offer to Purchase, the related letter of transmittal and other
Offer Documents to holders of shares of the Company Common Stock. Each of
Parent, Sub and the Company will promptly correct any information provided by it
for use in the Offer Documents that becomes false or misleading in any material
respect, and each of Parent and Sub will take all steps necessary to cause the
Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to holders of shares of Company
Common Stock, in each case as and to the extent required by applicable law. Sub
will provide the Company and its counsel in writing with any comments Sub or its
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments. Parent, Sub and their
counsel will provide the Company and its counsel with a reasonable opportunity
to participate in all communications with the SEC and its staff, including any
meetings and telephone conferences relating to the Offer Documents, the Offer,
the Merger or this Agreement.
(c) Sub will, and Parent will cause Sub to, designate a bank or trust
company reasonably acceptable to the Company as the paying agent for the Offer
(the "Offer Paying Agent"). Sub agrees to deposit, and Parent agrees to cause
------------------
Sub to deposit, with the Offer Paying Agent simultaneously with the consummation
of the Offer such funds as are necessary to make the cash payments required by
the Offer. In no event shall any shareholder of the Company who has surrendered
certificates representing Company Common Stock be entitled to receive interest
on any of the funds to be received pursuant to the Offer. If a check is to be
sent to a person other than the person in whose name a certificate for Company
Common Stock surrendered in connection with the Offer is registered, it shall be
a condition of the transfer that the person requesting such transfer shall pay
to the Offer Paying Agent any transfer or other taxes required by reason of the
delivery of such check to a person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the Offer
Paying Agent that such tax has been paid or is not applicable. Notwithstanding
the foregoing, neither the Offer Paying Agent nor any party hereto shall be
liable to a holder of Company Common Stock for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(d) Sub and Parent will file with the Commissioner of Commerce of the
State of Minnesota any registration statement relating to the Offer required to
be filed pursuant to Chapter 80B of the Minnesota Statutes.
Section 1.2 Company Action.
--------------
-3-
<PAGE>
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Board of Directors of the Company, at a meeting
duly called and held, acting on the unanimous recommendation of the special
committee of all independent directors (the "Special Committee") of the Board of
-----------------
Directors of the Company established pursuant to Section 302A.673(d) of the
Minnesota Business Corporation Act (the "MCBA") on August 14, 1995, has
----
unanimously and duly adopted resolutions approving this Agreement, the Offer and
the Merger, determining that the Merger is advisable and that the terms of the
Offer and Merger are fair to, and in the best interests of, the Company and its
shareholders and recommending, subject to the terms and conditions set forth
herein, that the Company's shareholders accept the Offer and approve the Merger
and approve and adopt this Agreement. The Company represents and warrants that
its Board of Directors has received the opinion of Alex Brown & Sons
Incorporated ("Alex Brown") that the proposed consideration to be received by
the Company's shareholders pursuant to the Offer and the Merger is fair to such
shareholders from a financial point of view, and a complete and correct copy of
such opinion has been delivered by the Company to Parent and Sub. The Company
has been advised by each of its directors and executive officers that each such
person intends to tender all shares of Company Common Stock owned by such person
pursuant to the Offer, except to the extent of any restrictions created by
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
------------- --------
Act").
---
(b) The Company will file with the SEC, on the date of the filing by
Sub of the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to
time, the "Schedule 14D-9") containing the recommendations described in Section
-------------- -------
1.2(a) above and will disseminate the Schedule 14D-9 as required by Rule 14d-9
------
promulgated under the Exchange Act. Each of the Company, Parent and Sub will
promptly correct any information provided by it for use in the Schedule 14D-9
that becomes false or misleading in any material respect, and the Company will
further take all steps necessary to cause the Schedule 14D-9 as so corrected to
be filed with the SEC and disseminated to the Company's shareholders, in each
case as and to the extent required by applicable law. The Company will provide
Parent and Sub and their counsel in writing with any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments. The Company and its counsel will
provide Parent and Sub and their counsel with a reasonable opportunity to
participate in all communications with the SEC and its staff, including any
meetings and telephone conferences relating to the Schedule 14D-9, the Offer,
the Merger or this Agreement.
(c) In connection with the Offer, the Company will (i) promptly
furnish Parent and Sub with mailing labels containing the names and addresses of
all record holders of shares of Company Common Stock as of a recent date and of
those persons
-4-
<PAGE>
becoming record holders after such date, together with copies of all security
position listings and computer files and all other information in the Company's
control regarding the beneficial owners of shares of Company Common Stock that
Parent or Sub may reasonably request and (ii) furnish to Parent or Sub such
other information and assistance as Parent or Sub or their agents may reasonably
request in expeditiously communicating the Offer to holders of shares of Company
Common Stock.
(d) Effective upon payment by Sub for all shares of Company Common
Stock accepted for payment pursuant to the Offer (the "Closing of the Offer"),
--------------------
Sub will be entitled to designate up to such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as will give Sub
representation on such Board equal to the product of the number of directors on
such Board (giving effect to any increase in the number of directors pursuant to
this Section 1.2) and the ratio that the combined voting power of the shares of
-----------
the Company Common Stock so purchased bears to the total combined voting power
of all outstanding shares of the Company Common Stock, and the Company will use
its best efforts to take all action necessary to cause Sub's designees to be
elected or appointed to the Company's Board of Directors, including, without
limitation, amending the Company's by-laws, increasing the number of directors
or seeking and accepting resignations of incumbent directors. The Company agrees
to comply with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder in connection with this Section 1.2(d). Sub 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. Following the election or appointment of Sub's designees
pursuant to this Section 1.2 and prior to the Effective Time, if there shall be
-----------
any directors of the Company who were directors as of the date hereof, any
amendment of this Agreement, any termination of this Agreement by the Company,
any extensions by the Company of the time for the performance of any of the
obligations or other acts of Sub or Parent or waiver of any of the Company's
rights hereunder, will require the concurrence of a majority of such directors.
ARTICLE II
THE MERGER
Section 2.1 Effective Time of the Merger.
----------------------------
(a) Upon the terms and subject to the conditions hereof, and in
accordance with the MBCA, Sub shall be merged with and into the Company at the
Effective Time (as hereinafter defined), with the Company continuing as the
Surviving Corporation and succeeding to and assuming all the rights and
obligations of Sub in accordance with the MBCA.
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<PAGE>
(b) Upon the terms and subject to the conditions hereof, articles of
merger or other appropriate documents (the "Articles of Merger") will be duly
------------------
prepared and executed by the Company and Sub and thereafter delivered to the
Secretary of State of the State of Minnesota for filing as provided in the MBCA
as soon as practicable on the Closing Date (as defined in Section 2.2). The
-----------
Merger will become effective upon the filing of the Articles of Merger with the
Secretary of State of the State of Minnesota or at such other later date or time
as Sub and the Company shall agree and as specified in the Articles of Merger
(the time the Merger becomes effective being the "Effective Time").
--------------
Section 2.2 Closing. Unless this Agreement is terminated and the
-------
transactions contemplated herein abandoned pursuant to Section 8.1, the closing
-----------
of the Merger (the "Closing") will take place at 10:00 a.m. on a date to be
-------
specified by the parties, which will be no later than the second business day
following the satisfaction or, if permissible, waiver of each of the conditions
set forth in Article VII (the "Closing Date"), at the offices of Sidley &
------------
Austin, 875 Third Avenue, New York, New York 10022, unless another date or place
is agreed to by the parties hereto.
Section 2.3 Effects of the Merger. The Merger will have the effects
---------------------
set forth in the MBCA. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the rights, privileges, immunities,
powers and franchises (of a public as well as of a private nature) of the
Company and of Sub and all the property (real, personal and mixed) of the
Company and of Sub and all debts due to either the Company or Sub on any
account, including subscriptions to shares, and all choses in action, and every
other interest of or belonging to or due to either the Company or Sub, will vest
in the Surviving Corporation, and all debts, liabilities, obligations and duties
of the Company and Sub shall become the debts, liabilities, obligations and
duties of the Surviving Corporation and may be enforced against the Surviving
Corporation to the same extent as if such debts, liabilities, obligations and
duties had been incurred or contracted by the Surviving Corporation. The title
to any real estate or any interest therein vested, by deed or otherwise, in the
Company or Sub shall not revert or in any way become impaired by reason of the
Merger, and all rights of creditors and all liens upon any property of the
Company or Sub shall be preserved unimpaired following the Merger.
Section 2.4 Articles of Incorporation and By-Laws.
-------------------------------------
(a) The Articles of Incorporation of the Company, as in effect
immediately prior to the Effective Time, will be amended as of the Effective
Time so that Article V thereof reads in its entirety as follows:
"The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,000 shares of
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Common Stock, par value $1.00 per share."
and, as so amended, such Articles of Incorporation will be the Articles of
Incorporation of the Surviving Corporation, until amended in accordance
therewith and with applicable law.
(b) The By-Laws of Sub, as in effect immediately prior to the
Effective Time, will be the By-Laws of the Surviving Corporation until amended
in accordance therewith and with applicable law.
Section 2.5 Directors. The directors of Sub at the Effective Time
---------
will be the directors of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Articles of Incorporation and By-Laws of
the Surviving Corporation and until his or her successor is duly elected and
qualified.
Section 2.6 Officers. The officers of Sub at the Effective Time will
--------
be the officers of the Surviving Corporation, each to hold office from the
Effective Time in accordance with the Articles of Incorporation and By-Laws of
the Surviving Corporation and until his or her successor is duly appointed and
qualified.
ARTICLE III
CONVERSION OF SECURITIES; DISSENTING SHARES
Section 3.1 Conversion of Capital Stock. As of the Effective Time, by
---------------------------
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of the Company or of Sub:
(a) Each issued and outstanding share of common stock of Sub, $1.00
par value per share, shall be converted into issued and outstanding shares of
Common Stock, par value $1.00 per share, of the Surviving Corporation.
(b) All shares of Company Common Stock that are owned, directly or
indirectly, by any Subsidiary (as hereinafter defined) of the Company, any
shares of Company Common Stock owned by Parent, Sub or any wholly owned
Subsidiary of Parent and any shares of Company Common Stock that have been
acquired by the Company and are subject to an outstanding pledge by the Company
immediately prior to the Effective Time to secure the future payment of the
purchase price therefor will be cancelled and will cease to exist and no shares
of capital stock of Parent or Sub or other consideration will be delivered in
exchange therefor. As used in this Agreement, "Subsidiary" means, with respect
----------
to any party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary
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<PAGE>
of such party is a general partner (excluding any partnership, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership) or
(ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party, by any
one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries. References to a wholly owned Subsidiary of an entity include a
Subsidiary all the common equity of which is owned directly or through wholly
owned Subsidiaries by such entity.
(c) Subject to Section 3.6, each share of Company Common Stock issued
-----------
and outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 3.1(b)) shall be converted into the right
--------------
to receive from the Surviving Corporation in cash, without interest, the Per
Share Amount paid pursuant to the Offer (the "Merger Consideration"). All such
--------------------
shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and each holder of a
certificate or certificates (the "Certificates") which immediately prior to the
------------
Effective Time represented any such shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
Section 3.2 Exchange of Certificates. (a) Paying Agent. Parent shall
------------------------ ------------
authorize a commercial bank or such other person or persons as shall be
acceptable to Parent and the Company to act as paying agent hereunder (the
"Paying Agent") for the payment of the Merger Consideration upon surrender of
------------
the Certificates.
(b) Surviving Corporation to Provide Funds. Parent shall deposit or
--------------------------------------
cause to be deposited in trust with the Paying Agent at the Effective Time cash
in an aggregate amount necessary to make the payments pursuant to Section 3.1
hereof to holders (other than Parent or Sub or any of their respective
subsidiaries) of shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time (such amounts being hereinafter referred
to as the "Payment Fund"). The Paying Agent shall, pursuant to irrevocable
instructions, make the payments provided for in the preceding sentence out of
the Payment Fund. The Paying Agent shall invest portions of the Payment Fund as
Parent directs, provided that substantially all such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations receiving the highest rating from either Moody's Investors
Services, Inc. or Standard and Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or banker's acceptances of commercial banks
with capital exceeding $100 million. The Payment Fund shall not be used for any
other purpose, except as provided in this Agreement.
-8-
<PAGE>
(c) Exchange Procedures. As soon as practicable after the Effective Time,
-------------------
the Paying Agent shall mail to each holder of record of a Certificate, other
than Parent, the Company, any Subsidiary of Parent or the Company and any holder
of Dissenting Company Common Stock (as defined below), (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 actual delivery of the
Certificates to the Paying Agent, and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by the Surviving
Corporation, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the amount of
cash into which the shares of Company Common Stock theretofore represented by
such Certificate shall have been converted pursuant to Section 3.1, and the
-----------
Certificates so surrendered shall forthwith be cancelled. No interest will be
paid or will accrue on the cash payable upon the surrender of any Certificate.
If payment is to be made to a person other than the person in whose name the
Certificate so surrendered is registered, it shall be a condition of payment
that such Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 3.2, each Certificate shall be
-----------
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
shares of Company Common Stock theretofore represented by such Certificate shall
have been converted pursuant to Section 3.1. Notwithstanding the foregoing,
-----------
neither the Paying Agent nor any party shall be liable to a former shareholder
of the Company for any cash or interest delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws. Any portion of the
Payment Fund (including the proceeds of any investments thereof) that remains
unclaimed by the shareholders of the Company for at least two years after the
Effective Time shall be repaid to the Surviving Corporation. Any holders of
shares of Company Common Stock who have not theretofore complied with Section
3.1 shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration, but will have no greater rights against the Surviving
Corporation (or any of the parties hereto) than may be accorded to general
creditors thereof under applicable law.
Section 3.3 No Further Ownership Rights in Company Common Stock. All cash
---------------------------------------------------
paid upon the surrender of Certificates in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock theretofore represented by such
Certificates.
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<PAGE>
Section 3.4 Closing of Company Transfer Books. At the Effective Time, the
---------------------------------
stock transfer books of the Company shall be closed and no registration of
transfers of shares of Company Common Stock shall thereafter be made on the
stock transfer books of the Surviving Corporation. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
cancelled and exchanged as provided in this Article III.
-----------
Section 3.5 Withholding. The Surviving Corporation or the Paying Agent
-----------
will be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as the Surviving Corporation or the Paying Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "Code"), or any applicable provision of
----
state, local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or the Paying Agent, such withheld amounts will be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or the Paying Agent.
Section 3.6 Dissenting Company Common Stock. If required by the MBCA, but
-------------------------------
only to the extent required thereby, shares of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and that are held
by holders of such shares who have properly exercised dissenters' rights with
respect thereto in accordance with Sections 302A.471 and 302A.473 of the MBCA
(the "Dissenting Company Common Stock") will not be converted into or
-------------------------------
exchangeable for the right to receive the Merger Consideration, and holders of
such shares of Dissenting Company Common Stock will be entitled to receive
payment of the appraised value of such shares of Dissenting Company Common Stock
in accordance with the provisions of such Section 302A.473 unless and until such
holders fail to perfect or effectively withdraw or lose their rights to payment
under Section 302A.473 of the MBCA. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Dissenting Company Common Stock will thereupon be treated as if they
had been converted into and become exchangeable for, at the Effective Time, the
right to receive the Merger Consideration, without interest. The Company will
give Parent prompt written notice of any notice of intent to demand payment of
the fair value of Company Common Stock under Section 302A.473 of the MCBA
received by the Company and, prior to the Effective Time, Parent and Sub will
have the right to direct all negotiations and proceedings with respect to such
demands. Prior to the Effective Time, the Company will not, except with the
prior written consent of Parent and Sub, make any payments with respect to, or
settle or offer to settle, any such demands.
Section 3.7 Lost, Stolen or Destroyed Certificates. In the event any
--------------------------------------
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<PAGE>
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and subject to such other conditions as the Board of
Directors of the Surviving Corporation may impose, the Surviving Corporation
shall issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof as determined in accordance
herewith. When authorizing such issue of the Merger Consideration in exchange
therefor, the Board of Directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate to give the Surviving
Corporation a bond in such sum as it may reasonably direct as indemnity against
any claim that may be made against the Surviving Corporation with respect to the
Certificate alleged to have been lost, stolen or destroyed.
Section 3.8 Further Assurances. If at any time after the Effective Time
------------------
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either of the Constituent Corporations in the Merger, all such deeds,
bills of sale, assignments and assurances and do, in the name and on behalf of
such Constituent Corporations, all such other acts and things necessary,
desirable or proper to vest, perfect or confirm its right, title or interest in,
to or under any of the rights, privileges, powers, franchises, properties or
assets of such Constituent Corporation and otherwise to carry out the purposes
of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization.
------------
(a) Each of the Company and each of its Subsidiaries is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate or partnership power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, except where
the failure to be so organized, existing or in good standing or to have such
power and authority would not, individually or in the
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<PAGE>
aggregate, have a material adverse effect on the Company or on the ability of
the Company to perform its obligations under this Agreement. Each of the
Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing 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 as disclosed in Section 4.1 of
the Company Disclosure Letter and except where the failure to be so duly
qualified or licensed and in good standing would not, individually or in the
aggregate, have a material adverse effect on the Company or on the ability of
the Company to perform its obligations under this Agreement.
(b) The Company has heretofore made available to Parent a complete and
correct copy of the charter and by-laws or comparable organization documents,
each as amended to date, of the Company and each of its Subsidiaries. Such
charters, by-laws and comparable organizational documents are in full force and
effect. Neither the Company nor any Subsidiary of the Company is in violation
of any provision of its charter, by-laws or comparable organizational documents.
Section 4.2 Capitalization.
--------------
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of Company Common Stock of which, as
of May 27, 1995, 7,564,895 shares were issued and outstanding, (ii) 75,000
shares of Class A Preferred Stock, of which, as of the date hereof, none were
issued or outstanding, (iii) 125,000 shares of Class B Preferred Stock, of
which, as of the date hereof, none were issued or outstanding and (iv) 125,000
shares of Class C Preferred Stock, of which, as of the date hereof, none were
issued or outstanding. No shares of capital stock of the Company have been
acquired by the Company that are subject to outstanding pledges to secure the
future payment of the purchase price therefor. As of May 27, 1995, the Company
had reserved for issuance (i) 56,000 shares of Company Common Stock upon
exercise of then outstanding options under the Company's now expired 1983
Incentive Stock Option Plan (as amended, the "Company Option Plan"), all of
-------------------
which options are exercisable at $8.38 per share, (ii) 25,954 shares of Company
Common Stock upon exercise of then outstanding options issued under a stock
option plan of Acsist Associates Inc. ("Acsist") prior to the Company's
acquisition thereof (the "Acsist Plan") or warrants issued by Acsist, 5,018 of
which are exercisable at $16.64 per share and 20,936 of which are exercisable at
$24.96 per share, and (iii) 326,000 shares of Company Common Stock in respect of
the Company's 1990 Restricted Stock Plan (the "Company Restricted Stock Plan"),
-----------------------------
with respect to all of which shares the restrictions, conditions and limitations
set forth in Section 7 thereof will lapse, upon the Closing of the Offer. Since
May 27, 1995, the Company has not issued any shares of its capital stock, except
for the issuance of Company Common Stock upon the exercise of options granted
under the Company Option Plan which were outstanding on May 27, 1995, and
pursuant to the Company
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<PAGE>
Restricted Stock Plan, and has not repurchased, redeemed or otherwise retired
any shares of its capital stock. All the outstanding shares of the Company's
capital stock are, and all shares which may be issued pursuant to the Company
Option Plan and the Company Restricted Stock Plan will be, when issued and paid
for in accordance with the respective terms thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to any preemptive rights of
third parties in respect thereto.
(b) Each of the outstanding shares of capital stock of each of the
Company's Subsidiaries is duly authorized, validly issued, fully paid,
nonassessable and free of any preemptive rights in respect thereto, and all such
shares are owned by the Company or by a Subsidiary of the Company free and clear
of any lien, claim, option, charge, security interest, limitation on voting
rights or encumbrance of any kind (collectively, "Liens"). Except for the
-----
capital stock of its Subsidiaries described in Section 4.2 of the disclosure
letter dated the date hereof from the Company to Parent (the "Company Disclosure
------------------
Letter"), the Company does not own, directly or indirectly, any capital stock or
------
other ownership interest in any corporation, partnership, trust, limited
liability company or other entity.
(c) As of the date of this Agreement, (i) no bonds, debentures, notes or
other indebtedness having the right to vote under ordinary circumstances (or
convertible into securities having such right to vote) ("Voting Debt") of the
-----------
Company or any of its Subsidiaries are issued or outstanding, (ii) except as set
forth above, there are no existing options, warrants, calls, subscriptions or
other rights or other agreements or commitments of any character (collectively,
"Warrants") relating to the issued or unissued capital stock or Voting Debt of
--------
the Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interests
in, the Company or of any of its Subsidiaries or securities convertible into or
exchangeable for such shares, Voting Debt or equity interests or obligating the
Company or any of its Subsidiaries to grant, extend or enter into any such
Warrant, and (iii) there are no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries or any
Warrants.
Section 4.3 Authority. The Company has the requisite power and authority
---------
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby, subject to, with respect to the Merger, the approval and
adoption of this Agreement and the Merger by the affirmative vote of the holders
of Company Common Stock entitled to cast at least 51% of the total number of
votes entitled to be cast by holders of Company Common Stock. The execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the Merger and of the other transactions contemplated hereby
have been duly authorized by all
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<PAGE>
necessary corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated, other than, with respect to
the Merger, the approval and adoption of this Agreement and the Merger by the
Company's shareholders as described in the preceding sentence. This Agreement
has been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that (i) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 4.4 Consents and Approvals; No Violations.
-------------------------------------
(a) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, arbitral tribunal, administrative agency
or commission or other governmental or regulatory authority or agency, domestic
or foreign (a "Governmental Entity"), or compliance with any law, statute,
-------------------
ordinance, rule or regulation that conditions, restricts, prohibits or requires
any notification or disclosure, triggered by the transfer, sale, lease or
closure of any property, is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the Merger or the other
transactions contemplated hereby, except for (i) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
-------
with the SEC of the Schedule 14D-9 and if required by applicable law, the
Company Proxy Statement (as defined in Section 4.6), and such reports as may be
-----------
required by Section 13(a) of the Exchange Act in connection with this Agreement
and the transactions contemplated hereby, (iii) the filing of the Articles of
Merger with the Minnesota Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, (iv) the filing required by Chapter 80B of the Minnesota Statutes and
(v) such other consents, approvals, orders, authorization, registrations,
declarations or filings the failure to obtain or make which would not have a
material adverse effect on the Company or on the ability of the Company to
perform its obligations under this Agreement. Neither the execution, delivery
or performance of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with or result in any 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 to loss of a material benefit) under, or result in the creation
of any Lien on any property or asset of the Company or any of its Subsidiaries
pursuant to (any such conflicts, violations, breaches, defaults, rights, or
creations of
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<PAGE>
Liens are herein referred to, collectively, as "Violations"), any of the terms,
----------
conditions or provisions of (i) the articles of incorporation or by-laws or
comparable organizational documents of the Company or any of its Subsidiaries,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument, permit, concession, franchise
or obligation applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets or (iii) any judgment, order, writ,
injunction, decree, law, statute, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or their respective properties or assets,
except, in the case of clause (ii), for Violations that would not prevent the
consummation of the Offer or the Merger and would not in the aggregate have a
material adverse effect on the Company or on the ability of the Company to
perform its obligations under this Agreement.
(b) Except as disclosed in the Company SEC Documents (as defined in
Section 4.5) filed prior to the date of this Agreement, neither the Company nor
-----------
any of its Subsidiaries is in default under or in violation of (i) any judgment,
order, writ, injunction, decree, law, statute, ordinance, rule or regulation of
any Governmental Entity applicable to the Company or any of its Subsidiaries or
by which any of them or any of their properties or assets may be bound or (ii)
any loan or credit agreement, 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
properties or assets may be bound or affected, except in each case for any such
defaults or violations which would not in the aggregate have a material adverse
effect on the Company or on the ability of the Company to perform its
obligations under this Agreement.
Section 4.5 SEC Reports and Financial Statements. Since January 1, 1992,
------------------------------------
the Company has filed with the SEC all forms, reports, schedules, statements and
other documents required to be filed by it under the Exchange Act and the
Securities Act of 1933, as amended (the "Securities Act"), and has heretofore
--------------
made available to Parent true and complete copies of all such forms, reports,
schedules, statements and documents (as they have been amended or supplemented
since the time of their filing and including all such forms, reports, schedules,
statements and documents filed with the SEC after the date of this Agreement,
collectively, the "Company SEC Documents"). The Company SEC Documents,
---------------------
including without limitation any financial statements or schedules included or
incorporated by reference therein, (i) did not at the time they were filed, or
will not at the time they are filed, contain any untrue statement of a material
fact or omit to state a 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 and (ii) complied or will be prepared in
compliance in all material respects with the applicable requirements of the
Exchange Act or the Securities Act, as the case may be, and the applicable rules
and regulations thereunder, except that no representation
-15-
<PAGE>
is made by the Company with respect to information provided by Parent or Sub for
inclusion in Company SEC Documents filed after the date hereof. The financial
statements of the Company included or incorporated by reference in the Company
SEC Documents comply or will be prepared in compliance in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been or will be prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, to normal year-end
audit adjustments) and fairly present or will fairly present (subject, in the
case of the unaudited statements, to normal year-end audit adjustments) the
consolidated financial position of the Company and its Subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended. Except as disclosed in the Company Disclosure
Letter, and except as reflected, reserved against or otherwise disclosed in the
financial statements of the Company included in the Company SEC Documents or as
otherwise disclosed in the Company SEC Documents, in each case filed prior to
the date of this Agreement, neither the Company nor any of its Subsidiaries has
any liabilities or obligations (absolute, accrued, fixed, contingent or
otherwise) material to the Company and its Subsidiaries, other than liabilities
incurred in the ordinary course of business consistent with past practice. The
amounts that would appear on the Company's consolidated balance sheet as of the
date of this Agreement as "Long-term debt", including current portions, does not
exceed $300,000.
Section 4.6 Information in Disclosure Documents.
-----------------------------------
(a) Neither the Schedule 14D-9 nor the information statement to be filed by
the Company in connection with the Offer pursuant to Rule 14f-1 under the
Exchange Act (the "Information Statement") nor any of the information supplied
---------------------
by the Company or any of its Subsidiaries specifically for inclusion in the
Offer Documents will, at the respective times the Schedule 14D-9, the
Information Statement or the Offer Documents are filed with the SEC or are first
published, sent or given to shareholders, as the case may be, 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 provided by
Parent or Sub for inclusion therein. The Schedule 14D-9 and the Information
Statement will comply as to form in all material respects with the applicable
requirements of the Exchange Act and the applicable rules and regulations
thereunder.
(b) The proxy or information statement relating to any meeting of the
Company's shareholders that may be required to be held in connection with the
Merger (as it may be amended from time to time, the "Company Proxy Statement")
-----------------------
will not, at
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<PAGE>
the date mailed to the Company's shareholders and at the time of the meeting of
shareholders to be held in connection with the Merger, 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, except that no
representation is made by the Company with respect to information provided by
Parent or Sub for inclusion therein. The Company Proxy Statement will, when
filed with the SEC by the Company, comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 4.7 Litigation. Except as described in Section 4.7 of the Company
---------- -----------
Disclosure Letter, there is no suit, claim, action, proceeding or investigation
pending or, to the best knowledge of the Company, threatened, against the
Company or any of its Subsidiaries before any Governmental Entity which,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on the Company or a material adverse effect on the ability of the
Company to perform its obligations under this Agreement. Except as described in
Section 4.7 of the Company Disclosure Letter, neither the Company nor any of its
-----------
Subsidiaries is subject to any outstanding order, writ, injunction or decree
which, individually or in the aggregate, is reasonably likely to have a material
adverse effect on the Company or a material adverse effect on the ability of the
Company to perform its obligations under this Agreement.
Section 4.8 No Material Adverse Change. Except as disclosed in the
--------------------------
Company SEC Documents filed prior to the date of this Agreement and except as
disclosed in Section 4.8 of the Company Disclosure Letter, (i) since August 27,
-----------
1994, there has not been any action which would be prohibited under Section 6.1
-----------
were it to occur after the date of this Agreement or any material adverse change
with respect to the Company and its Subsidiaries and (ii) as of the date of this
Agreement, neither the Company nor any of its Subsidiaries has become a party to
any agreement or amendment to an existing agreement which would be required to
be filed by the Company as an exhibit to its next Annual Report on Form 10-K.
Section 4.9 Taxes.
-----
(a) Except as disclosed in Section 4.9 of the Company Disclosure Letter,
-----------
each of the Company and its Subsidiaries has duly filed all material Tax Returns
(as defined in Section 4.9(b)) required to be filed by it, all such Tax Returns
--------------
are complete and accurate in all material respects and disclose all material
Taxes (as defined in Section 4.9(b)) required to be paid by the Company and its
--------------
Subsidiaries, and the Company or its Subsidiaries has duly paid or caused to be
paid all Taxes shown to be due on such Tax Returns in respect of the periods
covered by such returns and has made provision adequate in all material respects
in the Company's financial statements for payment of all
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<PAGE>
Taxes anticipated to be payable in respect of all taxable periods or portions
thereof ending on or before the date hereof. No Tax Returns filed by the
Company or its Subsidiaries have been "examined" by the Internal Revenue Service
(the "IRS") or other appropriate taxing authority. Except as described in
---
Section 4.9 of the Company Disclosure Letter, no issue or claim has been
-----------
asserted in writing for Taxes by any taxing authority for any prior period (and
to the best of the Company's knowledge no basis exists therefor), the adverse
determination of which would result in a deficiency which would have a material
adverse effect on the Company, other than those heretofore paid or provided for
in the Company's financial statements. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
Return of the Company or its Subsidiaries. There are no material liens for
Taxes upon the assets of the Company or any of its Subsidiaries except liens
relating to current Taxes not yet due. No transaction contemplated by this
Agreement is subject to withholding under Section 1445 of the Code and no stock
transfer Taxes, sales Taxes, use Taxes, real estate transfer Taxes, or other
similar Taxes will be imposed on Parent, Sub or the Company as a result of the
transactions contemplated by this Agreement under the laws of any jurisdiction
where the Company or any of its Subsidiaries does business. All Taxes which the
Company or any of its Subsidiaries have been required by law to withhold or to
collect for payment have been duly withheld or collected and paid to the
appropriate taxing authority, except where the failure to so withhold or collect
such Taxes would not have a material adverse effect on the Company. Neither the
Company nor any of its Subsidiaries is a party to any agreement, contract or
arrangement that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
Except as set forth in Section 4.9 of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries (i) has been a member of a group filing
consolidated returns for federal income tax purposes, or (ii) is a party to a
tax sharing or tax indemnity agreement or any other agreement of a similar
nature that remains in effect.
(b) For purposes of this Agreement, the term "Taxes" means all taxes,
-----
charges, fees, levies or other assessments, including, without limitation,
income, gross receipts, excise, property, sales, use, transfer, license,
payroll, employment, withholding, environmental, capital stock, ad valorem,
alternate or add-on minimum and franchise taxes, imposed by the United States or
any state, local or foreign government or subdivision or agency thereof,
including any interest, penalties or additions thereto. For purposes of this
Agreement, the term "Tax Return" means any report, return or other information
----------
or document required to be supplied to a taxing authority in connection with
Taxes.
Section 4.10 Benefit Plans. (a) With respect to any "employee benefit
------------- ----------------
plan" (as defined in Section 3(3) of the Employee Retirement Income Security Act
----
of 1974, as amended ("ERISA")), maintained or contributed to by the Company or
any
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<PAGE>
entity treated as a single employer under Section 414 of the Code ("ERISA
Affiliates") with the Company or with respect to which the Company or any of its
ERISA Affiliates is required to make any payment and any deferred compensation,
stock option, bonus, vacation or other such compensation arrangement to which
the Company is required to make any payment (collectively referred to as the
"Company Benefit Plans"), the Company has made available to Sub a true and
correct copy of (i) the most recent annual report (Form 5500) filed with the
IRS, (ii) such Company Benefit Plan, (iii) each trust agreement and group
annuity contract, if any, relating to such Company Benefit Plan and (iv) the
most recent actuarial report or valuation relating to a Company Benefit Plan
subject to Title IV of ERISA. Each Company Benefit Plan (i) has been
administered in accordance with its terms in all material respects and (ii)
complies in form and has been administered in accordance with any and all
applicable state and federal laws, including ERISA and the Code, so as not to
give rise to any liability that would have a material adverse effect on the
Company and its Subsidiaries. Each Company Benefit Plan and each trust that is
intended to qualify under Section 401(a) and 501(a) of the Code is so qualified
or, if not so qualified, the failure to be so qualified would not have a
material adverse effect on the Company. Section 4.10 of the Company Disclosure
Letter sets forth a true and complete list of each material Company Benefit
Plan.
(b) All contributions and premiums required by law or by the terms of such
employee benefit plan or any agreement relating thereto have been timely made
(without regard to any waiver granted with respect thereto), except where the
failure to make such contributions and premiums would not have a material
adverse effect on the Company.
(c) With respect to the Company Benefit Plans, individually and in the
aggregate, no event has occurred, and neither the Company nor any of its ERISA
Affiliates has knowledge of any condition or set of circumstances in connection
with which the Company or any of its ERISA Affiliates is reasonably likely to be
subject to any liability that would have a material adverse effect on the
Company under ERISA, the Code or any other applicable law, including of any
"reportable event" (as defined in Section 4043(b) of ERISA) or any "prohibited
transaction" (as defined in Section 406 of ERISA and Section 4975(c) of the
Code).
(d) With respect to the Company Benefit Plans, individually and in the
aggregate, there has not occurred any "accumulated funding deficiency" (within
the meaning of Section 412 of the Code), neither the Company nor any of its
ERISA Affiliates has failed to make a payment required under Section 412 of the
Code before the applicable due date, and there are no unfunded benefit
obligations which have not been accounted for by reserves, or otherwise properly
footnoted in accordance with generally accepted accounting principles, on the
financial statements of the Company or any of its ERISA Affiliates, which would
have a material adverse effect on the Company.
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<PAGE>
(e) There have been no violations of ERISA with respect to the filing of
applicable returns, reports, documents or notices regarding any of the Company
Benefit Plans with the Secretary of Labor or the Secretary of Treasury or the
furnishing of such notices or documents to the participants or beneficiaries of
the Company Benefit Plans which have not subsequently been resolved or corrected
which would have a material adverse effect on the Company and its Subsidiaries.
(f) To the Company's knowledge, there are no pending legal proceedings
which have been asserted or instituted against any Company Benefit Plan, the
assets of any such plan or the Company, or the plan administrator or fiduciary
of any Company Benefit Plan with respect to the operation of any such plan
(other than routine, uncontested benefit claims), and there are no facts or
circumstances which could form the basis for any such legal proceedings. To the
Company's knowledge, neither the Company nor any fiduciary of any plan which is
not a multiemployer plan has engaged in a nonexempt prohibited transaction
described in Section 406 of ERISA or 4975 of the Code.
(g) Each Company Benefit Plan complies in all material respects with all
applicable requirements of (i) the Age Discrimination in Employment Act of 1967,
as amended, and the regulations thereunder and (ii) Title VII of the Civil
Rights Act of 1964, as amended, and the regulations thereunder. Each group
medical plan sponsored by the Company materially complies with the health care
continuation provisions of COBRA and (ii) the Medicare Secondary Payor
Provisions of Section 1826(b) of the Social Security Act, and the regulations
promulgated thereunder.
(h) With respect to each Company Benefit Plan which is a multi-employer
plan (as described in Section 3(37) of ERISA), to the Company's knowledge, no
proceeding has been initiated to terminate any such plan with respect to which
the Company or any of its ERISA Affiliates has or has had an obligation to
contribute which would have a material adverse effect on the Company. Neither
the Company or any of its ERISA Affiliates has any material liability
outstanding on account of a "partial withdrawal" (within the meaning of Sections
4205 and 4203, respectively, of ERISA) from any Company Benefit Plan which is a
multi-employer plan and, to the Company's knowledge, no such liability has been
asserted and there are no events or circumstances which would have a material
adverse effect on the Company and its Subsidiaries. In the event that the
Company incurred a complete withdrawal under Section 4203 of ERISA, the
withdrawal liability arising under Section 4201 of ERISA with respect to each
Company Benefit Plan which is a multi-employer plan as a result thereof would
not have a material adverse effect on the Company.
(i) The Company has no liability under Sections 4063, 4064, 4069 or 4212(c)
of ERISA.
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<PAGE>
(j) The Company has no obligations under any of the Company Benefit
Plans to provide health or life insurance benefits to its prior employees (or
their beneficiaries or dependents) for periods after termination of employment,
except as specifically required by Part 6 of Title I of ERISA.
(k) Except as described in Section 4.10 of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or bound
by any written, or to the Company's knowledge, oral:
(i) employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by the Company or
any of its Subsidiaries without premium or penalty on notice of 30 days or
less under which the only monetary obligation of the Company or any of its
Subsidiaries is to make current wage or salary payments and provide current
fringe benefits), consulting, advisory or service agreement, deferred
compensation agreement, confidentiality agreement or covenant not to
compete;
(ii) contract or agreement with any officer, director or
employee (other than employment agreements disclosed in response to clause
(i) or excluded from the scope of clause (i)), agent, or attorney-in-fact
of the Company or any of its Subsidiaries; or
(iii) stock option, stock purchase, bonus or similar incentive
plan or agreement.
(l) Except as set forth in Section 4.10 of the Company Disclosure
Letter, the Company and each of its Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations which relate to prices,
wages, hours, discrimination in employment and collective bargaining and to its
operations and each is liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing. The Company believes that its
and its Subsidiaries' relations with their employees are satisfactory. Neither
the Company nor any of its Subsidiaries are a party to, and none of such parties
are materially affected by or threatened with, any dispute or controversy with a
union or with respect to unionization or collective bargaining involving its
employees. Neither the Company nor any of its Subsidiaries are materially
affected by any dispute or controversy with a union or with respect to
unionization or collective bargaining involving any supplier or customer.
Section 4.10 of the Company Disclosure Letter sets forth a description of any
union organizing or election activities involving any non-union employees of the
Company and its Subsidiaries which have occurred since August 27, 1994 or, to
the knowledge of the Company, are threatened as of the date hereof.
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<PAGE>
(m) None of the Offer, the Merger or any other transaction
contemplated by this Agreement will, whether by itself or as a result of any
subsequent termination of employment, result in the acceleration of entitlement
to, or the payment of, any benefit or compensation.
Section 4.11 Opinion of Financial Advisor. The Company has received
----------------------------
the opinion of Alex Brown, its financial advisor, to the effect that, as of
August 14, 1995, the consideration to be received in the Offer and the Merger,
taken as a whole, by the Company's shareholders is fair to the Company's
shareholders from a financial point of view, a copy of which opinion has been
delivered to Parent.
Section 4.12 Certain Antitakeover Provisions Not Applicable. The
----------------------------------------------
Board of Directors of the Company and the Special Committee have each approved
the Offer, the Merger and this Agreement, such Special Committee has been duly
constituted pursuant to Section 302A.673 of the MBCA and consists only of
disinterested directors as defined therein and such approval by the Special
Committee is sufficient to render inapplicable to this Agreement, the Merger and
to the other transactions contemplated by this Agreement the restrictions on
business combinations (as defined in Section 302A.011 of the MBCA) contained in
Section 302A.673 of the MBCA. Pursuant to Article 13 of the Company's Articles
of Incorporation, Section 302A.671 of the MBCA is not applicable to the Offer,
the Merger or the other transactions contemplated by this Agreement. Other than
Chapter 80B of the Minnesota Statutes, no other state takeover statute or
similar statute or regulation in any jurisdiction in which the Company or any of
its Subsidiaries does business, applies or purports to apply to the Offer, the
Merger or to this Agreement, or any of the transactions contemplated hereby or
thereby.
Section 4.13 Intellectual Property. Section 4.13 of the Company
--------------------- ------------
Disclosure Letter contains a correct and complete list of all patents,
trademarks, trade names, copyright registrations, mask work registrations and
applications therefor now or heretofore used or presently proposed to be used in
the conduct of the businesses of the Company and its Subsidiaries, excluding
computer software which is widely available. Except as set forth in
Section 4.13 of the Company Disclosure Letter, (i) the Company and its
------------
Subsidiaries own or possess adequate licenses or other valid rights to use
(without the making of any payment to others or the obligation to grant rights
to others in exchange) all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyright registrations, know-how and other
proprietary information ("Rights") necessary to the conduct of their business as
presently being conducted, except where the failure to have such licenses or
rights would not have a material adverse effect on the Company; (ii) neither the
Company nor any of its Subsidiaries has licensed any Rights to any third party;
(iii) the validity of such items and the title thereto of the Company and its
Subsidiaries has not been questioned in any litigation to which the Company or
any of its Subsidiaries is a party, nor is any such litigation threatened; nor
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<PAGE>
have any claims to such effect been made to the Company or any of its
Subsidiaries; (iv) the conduct of the business of the Company and its
Subsidiaries as now conducted does not and will not conflict with Rights of
others in any way which has a material adverse effect on the Company and (v) no
proceedings are pending against the Company or any of its Subsidiaries nor, to
the Company's knowledge, are any proceedings threatened against the Company or
any of its Subsidiaries alleging any violation of Rights of any third party.
The Company does not know of (x) any use that has heretofore been or is now
being made of any Rights owned by the Company or any of its Subsidiaries, except
by the Company or any of its Subsidiaries or by an entity duly licensed by it to
use the same under an agreement described in Section 4.13 of the Company
------------
Disclosure Letter or (y) any material infringement of any Right owned by or
licensed by or to the Company. All Rights heretofore owned or held by any
employee or officer of the Company or any of its Subsidiaries and used in the
business of the Company or any of its Subsidiaries in any manner have been duly
and effectively transferred to the Company or such Subsidiary. The consummation
of the Merger and the transactions contemplated hereby will not alter or impair
the rights and interests of the Company in any of the items listed in
Section 4.13 of the Company Disclosure Letter, and the Surviving Corporation
------------
will have the same rights and interests in such items as the Company will have
immediately prior to the Effective Time.
Section 4.14 Government Contracting Matters.
------------------------------
(a) Except as set forth in Section 4.14 of the Company Disclosure
Letter, the Company has complied with all material terms and conditions of all
Government Contracts, including all clauses, provisions and requirements
incorporated by reference or by operation of law therein. For the purposes of
this Agreement, "Government Contract" means any bid, quotation, proposal,
-------------------
contract, agreement, work authorization, lease, commitment or sale or purchase
order of the Company or any of its Subsidiaries that is with the United States
Government or any agency or instrumentality of the United States Government,
including all contracts and work authorizations to supply goods and services to
the United States Government and including contracts that are first-tier
subcontracts on United States Government prime contracts.
(b) Except as set forth in Section 4.14 of the Company Disclosure
Letter, the Company has complied with all applicable requirements of all laws,
regulations or agreements pertaining to Government Contracts. Neither the
United States Government, nor any United States Government agency or
instrumentality, nor any prime contractor, subcontractor or other person has
notified the Company or any of its Subsidiaries that the Company or any of its
Subsidiaries has breached or violated any law, regulation, certification,
representation, clause, provision or requirement pertaining to a Government
Contract.
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<PAGE>
(c) Except for the investigation of the Company by the Defense
Criminal Investigation Service of the United States Department of Defense that
the Company first received notice of in June 1995, including the related search
warrant and subpoena received by the Company prior to the date hereof (the "DCIS
----
Investigation"), there is no action, suit, proceeding or, to the Company's
-------------
knowledge, investigation relating to any proposed suspension or debarment of the
Company or any of its Subsidiaries or any of their respective directors,
officers, employees or agents from doing business with the United States (or any
agency or instrumentality thereof). Neither the Company nor any of its
Subsidiaries, nor any of their respective directors, officers, or employees is
(or during the last five years has been) suspended, proposed for debarment, or
debarred from doing business with the United States (or any agency or
instrumentality thereof) or is (or during such period was) the subject of a
finding of nonresponsibility or ineligibility for United States Government
contracting.
(d) Except in connection with the DCIS Investigation, (i) to the best
of the Company's knowledge, after diligent inquiry, none of the Company's or any
of its Subsidiaries' respective directors, officers, employees, consultants or
agents is (or during the last five years has been) under administrative, civil,
or criminal investigation, indictment or information by any governmental
authority with respect to any material alleged irregularity, misstatement or
omission arising under or relating to any Government Contract. Neither the
Company nor any of its Subsidiaries has any knowledge or, other than the
existence of the DCIS Investigation, any reason to know of any material
irregularity, misstatement or omission arising under or relating to any
Government Contract that has led or could reasonably lead, either before or
after the Closing Date, to any of the consequences set forth in Section 4.14(c)
---------------
or to any other material damage, penalty, assessment, recoupment of payment or
disallowance of cost.
(e) Except as set forth in Section 4.14 of the Company Disclosure
Letter, there exist (i) no outstanding material claims against the Company or
any of its Subsidiaries, either by the United States Government or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract; and (ii) no material disputes between the
Company and the United States Government, or any prime contractor,
subcontractor, vendor or other third party, arising under or relating to any
Government Contract.
(f) Neither the Company nor any of its Subsidiaries has, nor are any
of them in the conduct of their respective businesses required to have, any
facility security clearance or personnel security clearance or other security
clearance from the United States Government, and none of them have any access to
United States Government classified information in connection with any
Government Contract or otherwise.
(g) The Company has furnished Parent or Parent's attorneys with copies
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<PAGE>
of all material correspondence or written communication between the Company or
any of its Subsidiaries (or, to the knowledge of the Company, any of their
respective directors, officers or employees), on the one hand, and any agency or
instrumentality of the United States Government, including the Department of
Defense and the Office of the United States Attorney for the District of
Minnesota, on the other hand, concerning the DCIS Investigation.
Section 4.15 Votes Required. The affirmative vote of the holders of
--------------
at least 51% of the outstanding shares of Company Common Stock entitled to vote
with respect to the Merger, is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
Section 4.16 Brokers. No broker, investment banker or other person,
-------
other than Alex Brown, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. A true, correct
and complete copy of the engagement letter or other agreement between the
Company and Alex Brown has been delivered to Sub.
Section 4.17 Certain Agreements. Except as set forth in Section 4.17
------------------
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan, including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as described in Section 4.17 of the
Company Disclosure Letter, the transactions contemplated by this Agreement will
not constitute a "change of control" under, require the consent from or the
giving of notice to any third party pursuant to, or accelerate the vesting or
repurchase rights under, the terms, conditions or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, license, lease, 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 properties or
assets may be bound. There are no amounts payable by the Company to any officers
of the Company (in their capacity as officers) as a result of the transactions
contemplated by this Agreement and/or any subsequent employment termination.
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<PAGE>
Section 4.18 Environmental Compliance.
------------------------
(a) Except as set forth in the Company SEC Documents or otherwise
disclosed in Section 4.18 of the Company Disclosure Letter, to the knowledge of
the Company, there are no Environmental Liabilities (as defined below) of the
Company that have had or are likely to have a material adverse effect on the
Company.
(b) As used in this Agreement, "Environmental Laws" means any and all
federal, state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements and
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes in the indoor or outdoor environment, including without limitation
ambient air, surface water, ground water, land or interior of structures, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof,
"Environmental Liabilities" means any and all liabilities, losses, costs,
obligations, awards, fines, penalties, damages or expenses of or relating to the
Company or any of its Subsidiaries (including any entity which is, in whole or
in part, a predecessor of the Company or any of its Subsidiaries), whether
vested or unvested, contingent or fixed, actual or potential, known or unknown,
which arise under or relate to matters covered by Environmental Laws.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics, including, without limitation, any substance
regulated under Environmental Laws.
Section 4.19 Contracts. Except as set forth in Section 4.19 of the
---------
Company Disclosure Letter or as filed as an exhibit to the Company SEC
Documents, neither the Company nor any of its Subsidiaries is a party to or
bound by:
(i) any contract for the purchase or sale of real property;
(ii) any contract (excluding individual purchase orders) for the
purchase of raw materials which involved the payment of more than $500,000
in 1994, which the Company reasonably anticipates will involve the payment
of more than $500,000 in 1995, or which extends beyond August 27, 1997;
(iii) any contract (excluding individual purchase orders) for the
sale of goods or services which involved the payment of more than $500,000
in 1994, which the Company reasonably anticipates will involve the payment
of more than
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<PAGE>
$500,000 in 1995 or which extends beyond August 27, 1997;
(iv) any contract for the purchase, licensing or development of
software to be used by the Company or any of its Subsidiaries (excluding
paid-up software licenses to widely available computer software programs);
(v) any consignment, distributor, dealer, manufacturers
representative, sales agency, advertising representative or advertising or
public relations contract;
(vi) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, affiliates or others;
(vii) any agreement which provides for, or relates to, the incurrence
by the Company or any of its Subsidiaries of debt for borrowed money in
excess of $300,000 (including, without limitation, any interest rate or
foreign currency swap, cap, collar, hedge or insurance agreements, or
options or forwards on such agreements, or other similar agreements for the
purpose of managing the interest rate and/or foreign exchange risk
associated with its financing); or
(viii) any other contract, agreement, commitment, understanding or
instrument which is material to the Company or any of its Subsidiaries.
Section 4.20 New Directors. Each of the following directors of the
-------------
Company has submitted to the Company his written resignation, conditioned on and
effective as of the Closing of the Offer: Thomas F. Leahy; David C. Malmberg;
Stephen G. Shank; and William J. Cadogan. The Board of Directors of the Company
has appointed Geoff Wild, Donald J. Miller and D. McL. Miller, as directors of
the Company, conditioned on and effective as of the Closing of the Offer.
Copies of such resignations and such appointment have been furnished to Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 5.1 Organization. Each of Parent and Sub is a corporation
------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing or
in good standing or to have such power and authority would not, individually or
in the aggregate, have a material adverse effect on
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<PAGE>
Parent and its Subsidiaries.
Section 5.2 Authority. Each of Parent and Sub has the requisite
---------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by each of Parent (as a party hereto and as the
sole shareholder of Sub) and Sub and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of each of Parent and Sub. This
Agreement has been duly executed and delivered by each of Parent and Sub and
constitutes a valid and binding obligation of Parent and Sub, enforceable
against Parent and Sub in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
Section 5.3 Consents and Approvals; No Violations. No consent,
-------------------------------------
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by Parent and Sub or the consummation by Parent and Sub of the Merger or the
other transactions contemplated hereby, except for (i) the filing of a premerger
notification and report form by Parent under the HSR Act, (ii) the filing with
the SEC by Parent and Sub of the Offer Documents and of such reports under
Sections 13 and 16(a) of the Exchange Act as may be required in connection with
this Agreement and the transactions contemplated hereby, (iii) the filing of the
Articles of Merger with the Minnesota Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) such filings, approvals, orders, notices,
registrations, declarations and consents as may be required under any applicable
state takeover or similar laws, including Chapter 80B of the Minnesota Statutes,
and any applicable state environmental laws or laws with respect to the
ownership by a foreign entity of real property, (v) the filing of a notice as
required or deemed advisable pursuant to Section 721 of Title VII of the Defense
Production Act of 1950, as amended by the Omnibus Trade and Competitiveness Act
of 1988 (the "Exon-Florio Amendment") and (vi) such other consents, approvals,
---------------------
orders, authorizations, registrations, declarations or filings the failure to
obtain or make which would not have a material adverse effect on Parent or on
Parent's ability to perform its obligations under this Agreement. Neither the
execution, delivery or performance of this Agreement nor the consummation of the
transactions contemplated hereby will result in any Violation of any of the
terms, conditions or provisions of (i) the respective certificates of
incorporation or by-laws or comparable organizational documents of Parent or
Sub, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument, permit
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concession, franchise or obligation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets or (iii) any
judgment, order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent or any of its Subsidiaries or their respective properties
or assets except, in the case of clause (ii), for Violations that would not
prevent or impair the consummation of the Merger in any respect and would not,
individually or in the aggregate, have a material adverse effect on Parent and
its Subsidiaries or on the ability of Parent and Sub to perform their
obligations under this Agreement.
Section 5.4 Operations of Sub. Sub was organized solely for the
-----------------
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
Section 5.5 Information in Disclosure Documents.
-----------------------------------
(a) None of the Offer Documents or the information supplied by Parent
or Sub specifically for inclusion in the Schedule 14D-9 will, at the respective
times the Offer Documents (including any amendments or supplements thereto) or
the Schedule 14D-9 are filed with the SEC or are first published, sent or given
to shareholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) None of the information supplied by Parent or Sub specifically for
inclusion or incorporation by reference in the Company Proxy Statement will, at
the date mailed to the Company's shareholders and at the time of the meeting of
shareholders, if required by applicable law to be held in connection with the
Merger, 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.
Section 5.6 Financing. Parent and Sub collectively have (through
---------
existing credit facilities or otherwise) all the funds necessary to consummate
the Offer and the Merger and to pay all related fees and expenses.
Section 5.7 Brokers. No broker, investment banker or other person,
-------
other than Dillon Read & Co. and Baring Brothers Limited, the fees and expenses
of which will be paid by Parent and Sub, is entitled to any broker's, finder's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent and Sub.
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ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company. Except as contemplated
----------------------------------
by this Agreement or with the prior written consent of Sub, during the period
from the date of this Agreement to the Effective Time, the Company will, and
will cause each of its Subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will use
its best efforts, and will cause each of its Subsidiaries to use its best
efforts, to preserve intact its present business organization, keep available
the services of its present officers and employees and preserve its
relationships with licensors, licensees, customers, suppliers, employees and any
others having business dealings with it to the end that its goodwill and ongoing
business shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement, the Company will not, and will not permit any of its Subsidiaries to,
prior to the Effective Time, without the prior written consent of Sub:
(a) adopt any amendment to its certificate of incorporation or by-laws
or comparable organizational documents;
(b) issue, reissue, sell or pledge or authorize or propose the
issuance, reissuance, sale or pledge of any of its capital stock of any class,
or securities convertible or exchangeable into capital stock of any class, or
any rights, warrants or options to acquire any convertible or exchangeable
securities or capital stock, other than the issuance of shares of Company Common
Stock upon the exercise of stock options outstanding on the date of this
Agreement under the Company Option Plan in accordance with their present terms;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock or otherwise make any payments to
its shareholders in their capacity as such, except that any wholly owned
Subsidiary of the Company may pay dividends and make distributions to the
Company or any of the Company's wholly owned Subsidiaries;
(d) adjust, split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock;
(e) incur or assume any long-term debt or any short-term debt or
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any person, except
in the ordinary course
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of business consistent with past practice and in an aggregate amount not to
exceed $500,000;
(f) make any loans, advances (excluding the sale of products to
customers in the ordinary course) or capital contributions to, or investments
in, any person except in the ordinary course of business consistent with past
practice and in an aggregate amount not to exceed $500,000 for any single
borrower;
(g) settle or compromise any suit, proceeding or claim or threatened
suit, proceeding or claim;
(h) except for increases in salary, wages and benefits of employees of
the Company or its Subsidiaries (other than executive officers of the Company)
in accordance with past practice, increase the compensation or fringe benefits
payable or to become payable to its directors, officers or employees (whether
from the Company or any of its Subsidiaries), or pay any benefit not required by
any existing plan or arrangement (including the granting of, or waiver of
performance or other vesting criteria under, stock options, stock appreciation
rights, shares of restricted stock or deferred stock or performance units) or
grant any severance or termination pay to (except pursuant to existing
agreements or policies), or enter into any employment or severance agreement
with, any director, officer or employee of the Company or any of its
Subsidiaries or establish, adopt, enter into, terminate or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan, agreement,
trust, fund, policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except to the extent such termination
or amendment is required by applicable law;
(i) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets, other than transactions that are in the ordinary course of
business and not material to the Company or any of its Subsidiaries;
(j) sell, lease, mortgage or otherwise encumber or dispose of or agree
to sell, lease, mortgage or otherwise encumber or dispose of, any of its assets,
other than transactions that are in the ordinary course of business and not
material to the Company or any of its Subsidiaries;
(k) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any Subsidiary;
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(l) knowingly violate or fail to perform any obligation or duty
imposed upon it or any Subsidiary by any applicable federal, state or local law,
rule, regulation, guideline or ordinance;
(m) (i) modify, amend or terminate any contract, (ii) waive, release,
relinquish or assign any contract (including any insurance policy) or other
right or claim, (iii) prepay any indebtedness of the Company or any of its
Subsidiaries or (iv) cancel or forgive any indebtedness owed to the Company or
its Subsidiaries, other than in each case in a manner in the ordinary course of
business consistent with past practice and which is not material to the business
of the Company and its Subsidiaries;
(n) make any tax election not required by law or settle or compromise
any tax liability;
(o) change any of the accounting principles or practices used by it
except as required by the SEC or the Financial Accounting Standards Board; or
(p) authorize, recommend, announce, propose or agree to take any of
the foregoing actions or any action which would make any representation or
warranty in this Agreement that is qualified as to materiality untrue or
incorrect or which would make any representation or warranty in this Agreement
that is not so qualified untrue or incorrect in any material respect.
Section 6.2 Reasonable Best Efforts. Upon the terms and subject to
-----------------------
the conditions of this Agreement, unless, to the extent permitted by
Section 6.7(b), the Board of Directors of the Company approves or recommends a
--------------
superior proposal, each of the parties hereto will use its reasonable 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 to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or non-actions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by any Governmental Entity
(including those in connection with the HSR Act and the Exon-Florio Amendment),
(ii) the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any claims, investigations, actions, lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any stay or temporary restraining order entered by any court or
other Governmental Entity vacated or reversed and (iv) the execution and
delivery of any additional instruments (including any required supplemental
indentures) necessary to
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consummate the transactions contemplated by this Agreement. Each party will
promptly consult with the other with respect to, provide any necessary
information with respect to and provide the other (or its counsel) copies of,
all filings made by such party with any Governmental Entity in connection with
this Agreement and the transactions contemplated hereby. In addition, if at any
time prior to the Effective Time any event or circumstance relating to any of
the Company, Parent or Sub or any of their respective Subsidiaries, or any of
their respective officers or directors, should be discovered by the Company,
Parent or Sub, as the case may be, and which should be set forth in an amendment
or supplement to the Offer Documents, the discovering party will promptly inform
the other party of such event or circumstance.
Section 6.3 Access to Information. Upon reasonable notice, the
---------------------
Company will afford to the officers, employees, accountants, counsel and other
representatives of Parent and Sub, access, during normal business hours during
the period prior to the Effective Time, to all its properties, facilities,
books, contracts, commitments and records and other information as reasonably
requested by such party and, during such period, the Company will (and will
cause each of its Subsidiaries to) furnish promptly to Parent and Sub (a) a copy
of each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of United States
federal securities laws or regulations and (b) all other information concerning
its business, properties and personnel as Parent or Sub may reasonably request.
The parties will hold any such information which is nonpublic in confidence in
accordance with the terms of the Confidentiality Agreement, dated as of
August 1, 1994, as amended on June 28, 1995, between Johnson Matthey Inc. and
the Company (the "Confidentiality Agreement"), and in the event of termination
-------------------------
of this Agreement for any reason each party will promptly comply with the terms
of the Confidentiality Agreement. The Company shall use its best efforts to keep
Parent fully informed with respect to the DCIS Investigation and shall consult
with Parent prior to taking any material action in connection with the DCIS
Investigation.
Section 6.4 Company Shareholders Meeting. (a) Subject to Section 6.4(d),
---------------------------- --------------
the Company will, at Parent's request, duly call a meeting of its shareholders
(the "Shareholders' Meeting") for the purpose of voting upon this Agreement
---------------------
(insofar as it relates to the Merger), the Merger and related matters and use
its best efforts duly to give notice of, convene and hold such Shareholders'
Meeting as soon as practicable following consummation of the Offer. The Company
will, through its Board of Directors, recommend to its shareholders approval and
adoption of this Agreement and approval of the Merger, except to the extent that
the Board of Directors of the Company shall have withdrawn its approval or
recommendation of this Agreement or the Merger as permitted by Section 6.7(b).
--------------
(b) Subject to Section 6.4(d), the Company will, at Parent's request,
--------------
as
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soon as practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement with the SEC and will use its best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company's shareholders. The Company will notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the approval of this Agreement
by the Company's shareholders there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement, the Company will
promptly notify Parent thereof and prepare and mail to its shareholders such an
amendment or supplement. The Company will not mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects.
(c) At the Shareholder's Meeting, Parent, Sub and their affiliates
will vote all shares of Company Common Stock owned by them in favor of approval
and adoption of this Agreement and approval of the Merger.
(d) If at any time after the satisfaction or waiver of the conditions
set forth in Article VII (other than Section 7.1(b)), Parent and Sub own 90% or
--------------
more of the outstanding shares of Company Common Stock, then the provisions of
Sections 6.4 (a), (b) and (c) shall not apply and, as soon as practicable after
the satisfaction or waiver of the conditions set forth in Article VII (other
than Section 7.1(b)), the parties hereto will cause the Merger to be consummated
--------------
by filing the Articles of Merger with the Secretary of State of the State of
Minnesota in accordance with Sections 302A.621 and 302A.641 of the MBCA, and
make all other filings or recordings required by the MBCA in connection with the
Merger, including filing the notice to shareholders required by the MBCA in
connection with the Merger.
Section 6.5 Company Option Plan. (a) Subject to the next sentence,
-------------------
the Company shall use its best efforts to cause each holder of an outstanding
option (collectively, the "Employee Options") to purchase shares of Company
----------------
Common Stock granted under the Company Option Plan or under the Acsist Plan,
whether or not then exercisable, to agree in writing prior to the Effective Time
that (i) such holder shall be entitled to receive from the Company on the date
of the Closing of the Offer, in lieu of such Employee Option, an amount in cash
in respect of each share of Company Common Stock subject to such Employee Option
equal to the excess, if any, of the Merger Consideration over the per share
exercise price of such Employee Option (it being understood that if there is no
such excess with respect to any such Employee Option, such holder will not be
entitled to receive any cash, securities or other consideration with respect
thereto) and (ii) such Employee Option shall be cancelled concurrently
therewith.
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<PAGE>
Notwithstanding the foregoing, the Company shall use its best efforts to cause
each person subject to Section 16(b) of the Exchange Act to whom an Employee
Option was granted six months or less before the date of the Closing of the
Offer, whether or not then exercisable, to agree in writing prior to the date of
the Closing of the Offer (but effective as of and upon the date of the Closing
of the Offer) that (i) each such Employee Option shall be cancelled as of the
date of such agreement; (ii) no shares of Company Common Stock shall be issued
in respect thereof; and (iii) such person shall be entitled to receive from the
Company on the date (the "Option Payment Date") that is six months and one day
-------------------
following the date of grant of such option (but in no event earlier than the
Closing Date), in lieu of such Employee Option, a payment equal to the aggregate
amount of cash, if any, determined under the preceding sentence; provided that
--------
such person shall not be entitled to receive any such amount if prior to the
Option Payment Date such person (x) terminates his employment by the Surviving
Corporation or any of its Subsidiaries, otherwise than as a result of death or
disability or (y) is terminated by the Surviving Corporation or any of its
Subsidiaries for cause. All amounts payable pursuant to this Section 6.5(a)
--------------
shall be subject to any applicable withholding taxes and shall be paid without
interest.
(b) The Company shall use its best efforts to ensure that from and
after the Effective Time neither the Surviving Corporation nor any of its
Subsidiaries is or will be bound by any options, warrants, rights or agreements
which would entitle any person, other than Parent, Sub or their wholly owned
Subsidiaries, to beneficially own, or receive any payments (other than as
otherwise contemplated by Sections 3.1 and 3.6 and this Section 6.5) in respect
------------ --- -----------
of, any capital stock of the Company or the Surviving Corporation.
(c) The Company shall take all actions necessary, if any, to terminate
the Company Option Plan and the Acsist Plan effective as of the Effective Time.
Section 6.6 Company Benefit Plans. Parent presently intends that,
---------------------
for a period of one year following the Effective Time, the employees of the
Company will continue to be provided with employee benefits that are in the
aggregate not materially less favorable to such employees than those presently
provided under the Company's current benefit plans; provided that the right is
--------
reserved to review all employee benefit plans after the Effective Time and to
make such changes as are deemed appropriate in the judgment of Parent.
Section 6.7 No Solicitation. (a) The Company shall not, nor shall
---------------
it permit any of its Subsidiaries to, nor shall it authorize or permit any
officer, director or employee of or any investment banker, attorney or other
advisor or representative of the Company or any of its Subsidiaries to, (i)
solicit, initiate, or encourage the submission of, any takeover proposal, (ii)
enter into any agreement with respect to any takeover proposal
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<PAGE>
or (iii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any takeover proposal; provided, however,
-------- -------
that prior to the acceptance for payment of shares of Company Common Stock
pursuant to the Offer, to the extent required by the fiduciary obligations of
the Board of Directors of the Company, as determined in good faith by a majority
of the disinterested members thereof based on the written advice of outside
counsel (a copy of which written advice shall be promptly furnished to Parent),
the Company may, in response to unsolicited requests therefor, participate in
discussions or negotiations with, or furnish information pursuant to an
appropriate confidentiality agreement to, any person. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any officer, director or other management employee of
the Company or any of its Subsidiaries or any investment banker, attorney or
other advisor or representative of the Company or any of its Subsidiaries,
whether or not such person is purporting to act on behalf of the Company or
otherwise, shall be deemed to be a breach of this paragraph by the Company. For
purposes of this Agreement, "takeover proposal" means any proposal, other than a
-----------------
proposal by Parent or any of its affiliates, for a merger, consolidation, share
exchange, business combination or other similar transaction involving the
Company or any of its Subsidiaries or any proposal or offer (including, without
limitation, any proposal or offer to shareholders of the Company), other than a
proposal or offer by Parent or any of its affiliates, to acquire in any manner,
directly or indirectly, an equity interest in the Company or any of its
Subsidiaries, any voting securities of the Company or any of its Subsidiaries or
a substantial portion of the assets of the Company or any of its Subsidiaries.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent or Sub, the approval or recommendation by the Board of
Directors of the Company or any such committee of the Offer, this Agreement or
the Merger or (ii) approve or recommend, or propose to approve or recommend, any
takeover proposal. Notwithstanding the foregoing, the Board of Directors of the
Company, to the extent required by the fiduciary obligations thereof, as
determined in good faith by a majority of the disinterested members thereof
based on the written advice of outside counsel (a copy of which written advice
shall be promptly furnished to Parent), may approve or recommend (and, in
connection therewith, withdraw or modify its approval or recommendation of the
Offer, this Agreement or the Merger) a superior proposal and the Company may
take such actions as are contemplated by Rule 14e-2(a) and Rule 14d-9
promulgated under the Exchange Act. For purposes of this Agreement, "superior
proposal" means a bona fide proposal made by a third party to acquire the
Company pursuant to a tender or exchange offer, a merger, a statutory share
exchange, a sale of all or substantially all its assets or otherwise on terms
which a majority of the disinterested
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<PAGE>
members of the Board of Directors of the Company determines in its good faith
reasonable judgment (based on the advice of independent financial advisors) to
be more favorable to the Company and its shareholders than the Offer and the
Merger and for which financing, to the extent required, is then fully committed
or (based on the advice of independent financial advisors) is likely to be
obtained in a timely manner.
(c) The Company promptly shall advise Parent orally and in writing of
any takeover proposal or any inquiry with respect to or which could lead to any
takeover proposal and the identity of the person making any such takeover
proposal or inquiry. The Company will keep Parent fully informed of the status
and details of any such takeover proposal or inquiry.
Section 6.8 Fees and Expenses. (a) Except as provided in
-----------------
paragraphs (b) and (c) of this Section 6.8, all fees and expenses incurred in
-----------
connection with the Offer, the Merger, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
(b) The Company shall pay to Parent upon demand a fee of $2 million
(the "Termination Fee"), payable in same day funds, plus all Expenses (as
---------------
defined below), if:
(i) this Agreement is terminated pursuant to Section 8.1(b)(ii) as a
------------------
result of the failure of any condition set forth in paragraph (f)(ii), (g)
(but only if any member of the senior management of the Company was
personally involved in material misconduct discovered as a result of or in
connection with the DCIS Investigation), (h) (but only if the condition set
forth in such paragraph (h) was not satisfied on the date of this
Agreement) or (i) of Annex I; or
(ii) this Agreement is terminated pursuant to Section 8.1(c).
--------------
(c) If this Agreement is terminated pursuant to Section 8.1(b)(ii) as
------------------
a result of the failure of any condition set forth in paragraph (g) (but only
if, as a result of or in connection with the DCIS Investigation, there are
discovered any defects in the Company's products that are in excess of
historical levels and, in the aggregate (and after consideration of remedies
reasonably available to the United States in connection therewith), are
reasonably likely to have a material adverse effect on the Company) or (h) (but
only if the condition set forth in such paragraph (h) was satisfied on the date
of this Agreement) of Annex I (it being understood that in the event payment is
required under both paragraph (b)(i) and paragraph (c) of this Section 6.8,
-----------
payment shall be made pursuant to said paragraph (b)(i)), the Company shall,
whether or not the Termination Fee shall have been paid or shall be payable,
reimburse each of Parent and its affiliates
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<PAGE>
upon demand for all out-of-pocket fees and expenses incurred or paid by or on
behalf of Parent or any of its affiliates in connection with the Offer, the
Merger or the consummation of any of the transactions contemplated by this
Agreement, including all fees and expenses of counsel, investment banking firms,
accountants, experts and consultants to Parent or any of its affiliates and all
fees and expenses payable of banks, investment banking firms and other financial
institutions and their respective counsel, accountants or agents in connection
with arranging or providing financing (including underwriting fees in connection
with Parent's contemplated rights offering); provided that all such out-of-
pocket fees and expenses shall not exceed $3 million (collectively, the
"Expenses").
--------
(d) The Company acknowledges that the agreements contained in
paragraphs (b) and (c) of this Section 6.8 are an integral part of the
-----------
transactions contemplated by this Agreement, and that, without these agreements,
Parent and Sub would not enter into this Agreement; accordingly, if the Company
fails to pay promptly any amount due pursuant to this Section 6.8 and, in order
-----------
to obtain such payment, Parent or Sub commences a suit that results in a
judgment against the Company for any such amount, the Company shall pay to
Parent or Sub its costs and expenses (including attorneys' fees) in connection
with such suit, together with interest on the amount of the fee at the prime or
base rate of Bank of America NT&SA from the date such payment was due under this
Agreement.
Section 6.9 Notification of Certain Matters. Upon obtaining
-------------------------------
knowledge of any of the following, the Company will give prompt notice to Parent
and Sub, and Parent (or Sub, as the case may be) will give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be reasonably likely to cause (i) any
representation or warranty contained in this Agreement that is qualified as to
materiality to be untrue or incorrect or any representation or warranty that is
not so qualified to be untrue or incorrect in any material respect or (ii) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in any material respect, (b) any failure of the Company,
Parent or Sub, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder in any
material respect and (c) any change or event which has or is reasonably likely
to have a material adverse effect on the Company and its Subsidiaries or Parent
and its Subsidiaries, as the case may be; provided, however, that the delivery
-------- -------
of any notice pursuant to this Section 6.9 will not limit or otherwise affect
-----------
the remedies available hereunder to the party receiving such notice.
Section 6.10 Company Debt Agreements. The Company will (a) promptly
-----------------------
seek agreement, on terms reasonably acceptable to Sub, of the banks party to the
credit agreements of the Company or any of its Subsidiaries and the holders of
debt instruments
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<PAGE>
of the Company or any of its Subsidiaries (collectively, the "Company Debt") to
------------
amend such agreements and instruments to permit the execution by the Company of
this Agreement, and the purchase of shares of Company Common Stock pursuant to
the Offer, and the consummation of the Merger, and to provide that such actions
do not constitute an event permitting the banks or lenders which are parties
thereto to accelerate the amounts outstanding under such agreements and
instruments, and (b) in the event that such acceleration occurs prior to the
Merger, cooperate with Parent and Sub in arranging financing on terms reasonably
acceptable to Parent and Sub to finance any required repurchase or prepayment of
Company Debt.
Section 6.11 Public Announcements. The Company, Parent and Sub will
--------------------
consult with each other before issuing any press releases or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement and shall not issue any such press releases or make any such public
statements prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any national
securities exchange or the NASDAQ National Market.
Section 6.12 State Takeover Laws. If any "fair price", "control
-------------------
share acquisition" or "business combination" statute or other takeover or tender
offer statute or regulation shall become applicable to the transactions
contemplated by this Agreement, Parent, Sub and the Company and their respective
Boards of Directors shall use their best efforts to grant such approvals and
take such actions as are necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 6.13 Indemnification.
---------------
(a) For six years from and after the Effective Time, Parent agrees,
to the extent permitted by law, to cause the Surviving Corporation to indemnify
and hold harmless all current officers and directors of the Company and of its
Subsidiaries to the same extent such persons are currently indemnified by the
Company pursuant to the Company's Articles of Incorporation and By-Laws for acts
or omissions occurring at or prior to the Effective Time.
(b) Parent shall cause the Surviving Corporation to maintain in effect
for not less than three years from the Effective Time the policies of the
directors and officers' liability and fiduciary insurance most recently
maintained by the Company; provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous to the beneficiaries thereof so long
as such substitution does not result in gaps or lapses in
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coverage with respect to matters occurring prior to the Effective Time to the
extent available; provided further that Parent shall have no obligation under
this Section 6.13(b) to the extent that the cost of maintaining said policies
---------------
would be substantially higher than the current cost to the Company.
Section 6.14 Shareholder Litigation. Each of Parent and the Company
----------------------
shall use their best efforts to settle, and the Company shall give Parent the
opportunity to direct the defense, any shareholder litigation against the
Company and its directors relating to the transactions contemplated by this
Agreement; provided, however, that no such settlement shall be agreed to without
-------- -------
Parent's consent, which shall not be unreasonably withheld; and provided further
-------- -------
that no settlement requiring a payment by a director shall be agreed to without
such director's consent.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligations of the parties to effect the Merger are
------
subject to the satisfaction, on or prior to the Closing Date, of the following
condition:
(a) Offer. Sub shall have accepted for purchase and paid for shares
-----
of Company Common Stock pursuant to the Offer.
(b) Shareholder Approval. If required by applicable law, this
--------------------
Agreement (insofar as it relates to the Merger) and the Merger shall have been
approved and adopted by the requisite affirmative vote or consent of the holders
of the Company Common Stock in accordance with applicable law and the Company's
Articles of Incorporation.
(c) Other Approvals. All authorizations, consents, orders or
---------------
approvals of, or declarations or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, shall have occurred or shall have been obtained.
(d) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing or
impairing the consummation of the Merger in any material respect shall be in
effect on the Closing Date.
(e) No Action. No action, suit or proceeding (other than the DCIS
---------
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<PAGE>
Investigation) by any Governmental Entity before any court or governmental or
regulatory authority shall be pending or threatened on the Closing Date against
the Company, Parent or Sub or any of their Subsidiaries challenging the validity
or legality of the transactions contemplated by this Agreement.
Section 7.2 Conditions to Obligations of Parent and Sub. The
-------------------------------------------
respective obligations of Parent and Sub to effect the Merger are subject to the
satisfaction, on or prior to the Closing Date, of the following condition:
(a) Performance of Obligations; Representations and Warranties. The
----------------------------------------------------------
Company shall have performed in all material respects each of its agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, and each of the representations and warranties of the Company
contained in this Agreement that are qualified by materiality shall be true and
correct and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects, in each case, on and as of
the Effective Time as if made on and as of such date, and Parent and Sub shall
have received a certificate of the Company, signed by the President of the
Company, to that effect.
(b) Third Party Consents. All required authorizations, consents or
--------------------
approvals of any third party, the failure to obtain which would have a material
adverse effect on Parent, Sub and their Subsidiaries or the Company and its
Subsidiaries (assuming the Merger had taken place) shall have been obtained.
(c) Tax Statement. The Company shall have delivered to Parent a duly
-------------
executed and valid statement in the form prescribed by Treasury Regulation
(S) 1.897-2(h) to the effect that the Company Common Stock does not constitute a
"United States real property interest" within the meaning of Section 897(c)(1)
of the Code.
(d) Stock Option Plan. All Employee Options shall have been exercised
-----------------
or cancelled prior to the Effective Time as contemplated by Section 6.5.
-----------
(e) DCIS Investigation. After August 14, 1995, there shall have been,
------------------
in the reasonable judgment of Parent, no change or development or prospective
change or development in the DCIS Investigation or the circumstances surrounding
the DCIS Investigation that could reasonably be expected to have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. For
greater certainty, such a change or development shall be deemed to include the
following: (i) any proceeding commenced by any Governmental Entity for the
suspension or debarment of the Company or any of its Subsidiaries from doing
business with the United States (or any agency or instrumentality thereof); (ii)
any withdrawal of any governmental approval of the quality control or quality
assurance systems of the Company or any of its Subsidiaries or any removal of
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the Company or any of its Subsidiaries from any governmental "qualified products
list"; (iii) any notification of the Company or any of its Subsidiaries that any
of them is a target or subject of a criminal investigation; (iv) any indictment
of the Company or any of its Subsidiaries or of any of their respective
directors or officers; (v) the discovery of substantial evidence that any member
of the senior management of the Company was involved personally in material
misconduct or that there exists defects in the products of the Company or of any
of its Subsidiaries, which defects are in excess of historical levels and, in
the aggregate (and after consideration of remedies reasonably available to the
United States in connection therewith), are reasonably likely to have a material
adverse effect on the Company; or (vi) any civil action, suit or proceeding
commenced by any Governmental Entity seeking legal or equitable relief.
Section 7.3 Conditions to Obligations of the Company. The
----------------------------------------
obligation of the Company to effect the Merger is subject to the satisfaction,
on or prior to the Closing Date, of the following conditions:
(a) Performance of Obligations; Representations and Warranties. Each
----------------------------------------------------------
of Parent and Sub shall have performed in all material respects each of its
agreements contained in this Agreement required to be performed on or prior to
the Effective Time, and each of the representations and warranties of Parent and
Sub contained in this Agreement that is qualified by materiality shall be true
and correct and each of the representations and warranties that is not so
qualified shall be true and correct in all material respects, in each case, on
and as of the Effective Time as if made on and as of such date, and the Company
shall have received a certificate of Sub, signed by the President of Sub, to
that effect.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after approval of any
matters presented in connection with the Merger by the shareholders of the
Company:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company if:
(i) any required approval of the Merger by the shareholders of the
Company shall not have been obtained by reason of the failure to obtain the
required vote upon a vote held at a duly held meeting of such shareholders
or at any adjournment thereof;
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<PAGE>
(ii) (x) as the result of the failure of any of the conditions set
forth in Annex I hereto, (A) Sub shall have failed to commence the Offer
within 30 days following the date hereof or (B) the Offer shall have
terminated or expired in accordance with its terms without Sub having
purchased any shares of Company Common Stock pursuant to the Offer or (y)
Sub shall not have purchased any shares of Company Common Stock pursuant to
the Offer within 90 days following the date hereof; provided, however, that
-------- -------
the passage of the period referred to in clause (y) shall be tolled for any
part thereof during which any party shall be subject to a nonfinal order,
decree or ruling or action restraining, enjoining or otherwise prohibiting
the purchase of shares of Company Common Stock pursuant to the Offer or the
consummation of the Merger; and provided further that the right to
-------- -------
terminate this Agreement pursuant to this Section 8.1(b)(ii) shall not be
------------------
available to (i) the Company in connection with the failure of the
condition set forth in paragraph (f) of Annex I or (ii) any party whose
failure to fulfill any of its obligations under this Agreement results in
the failure of any such condition;
(iii) the Merger shall not have been consummated on or before the
date nine months following the date hereof, unless the failure to
consummate the Merger is the result of a material breach of this Agreement
by the party seeking to terminate this Agreement; provided, however, that
-------- -------
the passage of such period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order, decree or ruling or
action restraining, enjoining or otherwise prohibiting the Merger or the
calling or holding of a meeting of the shareholders of the Company called
to approve, inter alia, the Merger; or
----- ----
(iv) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the purchase of shares of Company
Common Stock pursuant to the Offer or the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
(c) by the Company if (i) to the extent permitted by Section 6.7(b),
--------------
the Board of Directors of the Company approves or recommends a superior
proposal and (ii) the Company has paid to Parent an amount in cash equal to the
sum of the Termination Fee plus all Expenses as provided by Section 6.8(b); or
--------------
(d) by Parent if Parent or Sub shall have received notice under (x)
the Exon-Florio Amendment that the Committee on Foreign Investment in the United
States ("CFIUS") has determined to investigate the Merger, any related
-----
transaction or Parent or Sub or (y) the HSR Act that the Federal Trade
Commission or the Antitrust Division of the Department of Justice has requested
additional information concerning the Offer, the
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Merger, any related transaction or Parent or Sub, extending the applicable
waiting period under the HSR Act.
Section 8.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either the Company or Parent as provided in Section 8.1, this
-----------
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 4.16, Section 5.7, the penultimate sentence of Section
------------ ----------- -------
6.3, Section 6.8, this Section 8.2 and Article IX, and except to the extent that
--- ----------- ----------- ----------
such termination results from the material breach by a party of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations and Warranties. None of
---------------------------------------------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement will survive the Effective Time.
Section 9.2 Amendment. This Agreement may be amended by the
---------
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company, but, after any
such approval, no amendment will be made which by law requires further approval
by such shareholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.3 Extension; Waiver. At any time prior to the Effective
-----------------
Time, the parties hereto, by action taken or authorized by the respective Boards
of Directors, may to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver will be valid only if set
forth in a written instrument signed on behalf of such party.
Section 9.4 Notices. All notices and other communications
-------
hereunder will be in writing and will be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as is specified by like notice):
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<PAGE>
(a) if to Sub to:
ACI Acquisition Corporation
In care of Johnson Matthey public limited company
460 East Swedesford Road
Wayne, Pennsylvania 19087-1880
Attention: D. McL. Miller
Vice President & General Counsel
Telecopy No.: (610) 971-3022
with copies to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: James G. Archer
Telecopy No.: (212) 906-2021
(b) if to Parent to:
Johnson Matthey public limited company
460 East Swedesford Road
Wayne, Pennsylvania 19087-1880
Attention: D. McL. Miller
Vice President & General Counsel
Telecopy No.: (610) 971-3022
with copies to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: James G. Archer
Telecopy No.: (212) 906-2021
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<PAGE>
(c) if to the Company, to:
Advance Circuits, Inc.
5929 Baker Road (Suite 470)
Minnetonka, Minnesota 55345
Attention: Chief Executive Officer
Telecopy No.: (612) 988-8727
with copies to:
Fredrikson & Byron, P.A.
1100 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Timothy M. Heaney
Telecopy No.: (612) 347-7077
Section 9.5 Interpretation. When a reference is made in this Agreement
--------------
to a Section, such reference will be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement they will be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, will be deemed
to refer to August 14, 1995. As used in this Agreement, any reference to any
event, change or effect being "material" or having a "material adverse effect"
on or with respect to an entity means such event, change or effect which is or
is reasonably likely to be materially adverse to the business, properties,
results of operations or financial condition of such entity and its Subsidiaries
taken as a whole. As used in this Agreement, any reference to the "knowledge" of
the Company shall refer to the actual knowledge of any of the executive officers
or directors of the Company (or, with respect to each plant or facility of the
Company and its Subsidiaries, the person primarily responsible for environmental
matters at such plant or facility), after reasonable investigation.
Section 9.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which will be considered one and the same agreement and
will become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.7 Entire Agreement; No Third Party Beneficiaries. This
----------------------------------------------
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<PAGE>
Agreement (including the documents and the instruments referred to herein) and
the Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof, and (b) other
than Section 6.13, are not intended to confer upon any person other than the
------------
parties hereto and thereto any rights or remedies hereunder or thereunder.
Section 9.8 Governing Law. This Agreement will be governed and
-------------
construed in accordance with the laws of the State of Minnesota applicable to
contracts made, executed, delivered and performed wholly within the State of
Minnesota, without regard to any applicable conflicts of law.
Section 9.9 Specific Performance. The parties hereto agree that if
--------------------
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties will be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
Section 9.10 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder will be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 9.11 Validity. The invalidity or unenforceability of any
--------
provision of this Agreement will not affect the validity or enforceability of
any other provisions hereof, which will remain in full force and effect.
Section 9.12 Parent Guarantee and No Solicitation Agreement.
----------------------------------------------
(a) Parent hereby irrevocably and unconditionally guarantees to the
Company the prompt and complete performance by Sub of each and every obligation
Sub may have under this Agreement. At the Company's discretion, Parent may be
joined in any action, suit or proceeding brought by the Company against Sub in
connection with this Agreement and Parent shall conclusively be bound by the
judgment in any action, suit or proceeding brought by the Company against Sub as
if Parent were a party thereto.
(b) For a period of one year from the date hereof, neither Parent nor
any of its affiliates shall, without the Company's consent, solicit the
employment of any person who, as of the date hereof, is a director, officer,
employee, independent sales agent or independent representative of the Company
or of any of its Subsidiaries;
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<PAGE>
provided that the provisions of this Section 9.12(b) shall terminate upon the
Closing of the Offer.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
JOHNSON MATTHEY PUBLIC LIMITED
COMPANY
By:/s/ David W. Morgan
--------------------------------
Name: David W. Morgan
Title: Finance Director, Materials Technology
Division
ACI ACQUISITION CORPORATION
By:/s/ D. McL. Miller
--------------------------------
Name: D. McL. Miller
Title: Secretary
ADVANCE CIRCUITS, INC.
By:/s/ Robert W. Heller
--------------------------------
Name: Robert W. Heller
Title: President and Chief Executive Officer
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<PAGE>
Annex I
Conditions to the Offer
-----------------------
Notwithstanding any other term or provision of the Offer or this
Agreement, Sub will not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to a bidder's obligation to pay for or return tendered
securities promptly after the termination or withdrawal of such bidder's offer),
to pay for any Company Common Stock tendered pursuant to the Offer and not
theretofore accepted for payment or paid for unless (1) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer that
number of shares of Company Common Stock that would represent at least 51% of
the Fully Diluted Shares (the "Minimum Tender Condition"), (2) CFIUS shall have
------------------------
determined not to investigate the transactions contemplated by the Offer and the
Merger under the Exon-Florio Amendment, (3) any waiting period under the HSR Act
applicable to the purchase of Company Common Stock pursuant to the Offer shall
have expired or been terminated and (4) the Offer shall be effective under
Sections 80B.01 to 80B.13 of the Minnesota Statutes and no Governmental Entity
shall have claimed or ruled the provisions of Sections 302.671 and 302.673 of
the MBCA to be applicable to this Agreement, the Offer or the Merger. "Fully
Diluted Shares" means all outstanding securities entitled generally to vote in
the election of directors of the Company on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into such voting securities. Furthermore,
notwithstanding any other term or provision of the Offer or this Agreement, Sub
will not be required to accept for payment or, subject as aforesaid, to pay for
any Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer if, at any time on or after the date of this
Agreement, and before the acceptance of such Company Common Stock for payment or
the payment therefor, any of the following events or facts shall have occurred:
(a) there shall be threatened, instituted or pending any action,
proceeding or application by any Governmental Entity, or by any other
person, domestic or foreign, before any court or Governmental Entity
(which, if brought by such other person, has a reasonable likelihood of
success), (i)(A) challenging or seeking to, or which is reasonably likely
to, make illegal, delay or otherwise directly or indirectly restrain or
prohibit, or seeking to, or which is reasonably likely to, impose voting,
procedural, price or other requirements, in addition to those required by
Federal securities laws and the MBCA each as in effect on the date of the
Offer, in connection with the making of the Offer, the acceptance for
-1-
<PAGE>
payment of, or payment for, some of or all the shares of Company Common
Stock by Parent, Sub or any other affiliate of Parent or the consummation
by Parent, Sub or any other affiliate of Parent of the Merger, (B) seeking
to obtain material damages or otherwise directly or indirectly relating to
the transactions contemplated by the Offer or the Merger, (ii) seeking to
prohibit the ownership or operation by Parent, Sub or any other affiliate
of Parent of all or any portion of the business or assets of the Company
and its Subsidiaries or of Parent, Sub or any other affiliate of Parent or
to compel Parent, Sub or any other affiliate of Parent to dispose of or
hold separate all or any portion of the business or assets of the Company
or any of its Subsidiaries or of Parent, Sub or any other affiliate of
Parent or seeking to impose any limitation on the ability of Parent, Sub or
any other affiliate of Parent to conduct such business or own such assets,
(iii) seeking to impose or confirm limitations on the ability of Parent,
Sub or any other affiliate of Parent effectively to exercise full rights of
ownership of the Company Common Stock, including, without limitation, the
right to vote any Company Common Stock acquired or owned by Parent, Sub or
any other affiliate of Parent on all matters properly presented to the
Company's shareholders, (iv) seeking to require divestiture by Parent, Sub
or any other affiliate of Parent of any Company Common Stock, or (v)
otherwise directly or indirectly relating to the Offer or the Offer
Documents or which otherwise, in the sole good faith judgment of Sub, is
reasonably likely to materially adversely affect the Company or any of its
Subsidiaries or Parent, Sub or any other affiliate of Parent or the value
of the Company Common Stock;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction proposed,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, (i) Parent, Sub or any other affiliate of Parent
or the Company or any of its Subsidiaries or (ii) the Offer or the Merger
by any government, legislative body or court, domestic, foreign or
supranational, or Governmental Entity, that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (vi) of paragraph (a) above;
(c) there shall have occurred any change, condition, event or
development that is reasonably likely to result in a material adverse
effect on the Company;
(d) there shall have occurred or been threatened (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or on The International Stock Exchange of the United Kingdom
and the Republic of Ireland Limited, (ii) any extraordinary or material
adverse change in the financial
-2-
<PAGE>
markets or major stock exchange indices in the United States or abroad,
(iii) any change in the general political, market, economic or financial
conditions in the United States or United Kingdom that is reasonably likely
to have a material adverse effect upon the Company or Parent or the trading
in, or value of, the Company Common Stock, (iv) any material change in
United States or the United Kingdom currency exchange rates or a suspension
of, or limitation on, the markets therefor, (v) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States or in the United Kingdom, (vi) any limitation (whether or not
mandatory) by any government, domestic, foreign or supranational, or
Governmental Entity on, or other event that is reasonably likely to affect
the extension of credit by banks or other lending institutions in the
United States or the United Kingdom, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or the United Kingdom or (viii) in
the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof;
(e) any material approval, permit, authorization, favorable review or
consent of any Governmental Entity required in connection with the Offer
shall not have been obtained on terms satisfactory to Sub;
(f) (i) it shall have been publicly disclosed or Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25% of the outstanding shares of Company Common Stock has
been acquired by another person, entity or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) or (ii) (x) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Sub its approval or recommendation of the
Offer, the Merger or this Agreement, or approved or recommended any
takeover proposal, (y) the Company shall have entered into any agreement
with respect to any takeover proposal or (z) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing;
(g) there shall have been, in the reasonable judgment of Parent, any
change or development or prospective change or development in the DCIS
Investigation or the circumstances surrounding the DCIS Investigation that
could reasonably be expected to have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. For greater certainty, such
a change or development shall be deemed to include the following: (i) any
proceeding commenced by any Governmental Entity for the suspension or
debarment of the Company or any of its Subsidiaries from doing business
with the United States (or
-3-
<PAGE>
any agency or instrumentality thereof); (ii) any withdrawal of any
governmental approval of the quality control or quality assurance systems
of the Company or any of its Subsidiaries or any removal of the Company or
any of its Subsidiaries from any governmental "qualified products list";
(iii) any notification of the Company or any of its Subsidiaries that any
of them is a target or subject of a criminal investigation; (iv) any
indictment of the Company or any of its Subsidiaries or of any of their
respective directors or officers; (v) the discovery of substantial evidence
that any member of the senior management of the Company was involved
personally in material misconduct or that there exist defects in the
products of the Company or of any of its Subsidiaries, which defects are in
excess of historical levels and, in the aggregate (and after consideration
of remedies reasonably available to the United States in connection
therewith), are reasonably likely to have a material adverse effect on the
Company; or (vi) any civil action, suit or proceeding commenced by any
Governmental Entity seeking legal or equitable relief;
(h) any of the representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality shall not be true
and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as if such representations and warranties were made as of such time;
(i) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement; or
(j) this Agreement shall have been terminated in accordance with its
terms or the Offer shall have been amended or terminated with the consent
of the Company;
which, in the good faith judgment of Sub, in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and Parent
and may be asserted by Sub regardless of the circumstances giving rise to any
such condition or may be waived by Sub in whole or in part at any time and from
time to time in its sole discretion. The failure by Sub at any time to exercise
any of the foregoing rights will not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances and
each such right will be deemed an ongoing right that may be
-4-
<PAGE>
asserted at any time and from time to time. Any good faith determination by Sub
concerning the events described in this Annex I will be final and binding upon
all parties.
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EXHIBIT G
Auditors' Report
to the members of Johnson Matthey Public Limited Company
Respective Responsibilities of Directors and Auditors
As described on page 28 the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
Basis of Opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgments made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the group's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which were considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of affairs of the company and the group as at 31st March 1995 and of the profit
of the group for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
7th June 1995
London
KPMG
Chartered Accountants
Registered Auditors
<PAGE>
Consolidated Profit and Loss Account
for the year ended 31st March 1995
[CAPTION]
<TABLE>
1995 1994
as restated
NOTE (Pounds)million (Pounds)million
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Turnover 8
Continuing operations 2,261.2 1,844.3
Discontinued operations 3 13.7 110.7
Less share of Cookson Matthey ceramics plc (97.1) -
-------- -------
2,177.8 1,955.0
------- -------
Net revenues
Continuing operations 411.3 372.3
Discontinued operations 3 2.0 18.7
Less share of Cookson Matthey Ceramics plc (58.2) -
------- -------
355.1 391.0
Operating profit 8
Continuing operations 100.4 81.5
Discontinued operations 3 - 0.1
------- -------
2 100.4 81.6
Loss on disposal of businesses 4 - (6.7)
Provision for restructuring in joint venture 4 (0.7) (5.0)
-------- --------
Profit on ordinary activities before interest 99.7 69.9
Net interest 5 (4.3) (4.6)
-------- ---------
Profit on ordinary activities before taxation 6 95.4 65.3
Taxation 10 (30.5) (20.7)
--------- ---------
Profit after taxation 64.9 44.6
Minority interests (1.0) (0.2)
---------- ----------
Profit attributable to shareholders 63.9 44.4
Dividends 7 (25.9) (21.8)
---------- ----------
Retained profit for the year 23 38.0 22.6
---------- ----------
pence pence
Earnings per ordinary share 9 33.4 23.5
Dividend per ordinary share 7 13.5 11.4
</TABLE>
The notes on pages 34 to 56 form an integral part of the accounts.
<PAGE>
Consolidated and Parent Company Balance Sheets
as at 31st March 1995
[CAPTION]
<TABLE>
Group Parent company
1995 1994 1995 1994
as restated as restated
NOTE (Pounds) million (Pounds) million (Pounds) million (Pounds) million
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed assets
Tangible fixed assets 13 272.7 323.1 87.0 101.3
Investments 14 70.9 1.1 153.0 23.5
------ ------ ------ ------
343.6 342.2 240.0 124.8
------ ------ ------ ------
Current assets
Stocks 15 153.6 156.9 113.6 87.3
Debtors: due within one year 16 140.3 168.3 240.4 296.2
Debtors: due after one year 16 49.3 37.6 78.3 107.6
Short term investments 1.2 1.3 1.2 1.3
Cash at bank and in hand 17 39.3 37.4 12.1 9.5
----- ----- ----- -----
383.8 401.5 445.6 501.9
Creditors: amounts falling due within one year
Borrowings 17 (90) (52.3) (53.3) (28.9)
Precious metal leases 18 (19.8) (17.5) (20.1) (11.1)
Other creditors 19 (149.1) (164.7) (108.7) (103.6)
------ ------ ------ ------
Net current assets 124.9 167.0 263.5 358.3
------ ------ ------ ------
Total assets less current liabilities 468.5 491.2 503.5 483.1
Creditors: amounts falling due after more
than one year
Borrowings 17 (51.7) (61.2) (33.9) (41.9)
Other creditors 19 (1.0) (2.5) -- --
Provisions for liabilities
and charges 20 (37.6) (57.4) (9.2) (11.6)
----- ------ ------ ------
Net assets 378.2 370.1 460.4 429.6
----- ------ ------ ------
Capital and reserves
Called up share capital 22 192.1 191.5 192.1 191.5
Share premium account 23 3.6 2.9 3.6 2.9
Revaluation reserve 23 17.0 45.3 6.0 26.9
Associated undertakings'
reserves 23 (1.1) 0.1 -- --
Profit and loss account 23 168.6 128.9 258.7 208.3
----- ----- ----- -----
Shareholder's fund 380.2 368.7 460.4 429.6
Minority interests (2.0) 1.4 -- --
----- ----- ----- -----
378.2 370.1 460.4 429.6
----- ----- ----- -----
</TABLE>
The accounts were approved by the Board of Directors on 6th June 1995
and signed on its behalf by:
D J Davies
Directors
J N Sheldrick
The notes on pages 34 to 56 form an integral part of the accounts.
<PAGE>
Consolidated Cash Flow Statement
for the year ended 31st March 1995
<TABLE>
<CAPTION>
1995 1994
as restated
NOTE (Pounds) million (Pounds) million
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash inflow from operating activities 25 59.3 67.0
Returns on investments and servicing of finance
Interest received from associated undertakings 2.0 -
Interest received 3.0 5.2
Interest paid (6.5) (9.5)
Interest element of finance lease rental payments - (0.1)
Dividends received from associated undertakings 0.9 1.0
Dividends paid to minority shareholders - (0.3)
Dividends paid (23.4) (7.1)
----- -----
Net cash outflow from returns on investments and servicing of finance (24.0) (10.8)
Taxation
UK corporation tax paid including advance corporation tax (6.1) (1.1)
Overseas tax paid (14.4) (16.9)
----- -----
Tax paid (20.5) (18.0)
Investing activities (46.0) (65.4)
Purchase of tangible fixed assets
Investment in subsidiary undertakings (net of cash and
cash equivalents acquired) 25 (11.2) (1.1)
Investment in associated undertakings 25 (5.7) -
Loans repaid by associated undertakings 0.5 -
Sale of businesses 25 19.0 35.3
Sale of tangible fixed assets 0.5 4.2
0.1 0.7
Sale of short term investments ----- -----
Net cash outflow from investing activities (42.8) (26.3)
----- -----
Net cash (outflow)/inflow before financing (28.0) 11.9
----- -----
Financing 25
Issue of ordinary share capital (1.3) (4.1)
(Increase)/decrease in borrowings (1.9) 23.2
Capital element of finance lease rental payments 0.4 0.6
----- -----
Net cash (inflow)/outflow from financing (2.8) 19.7
Decrease in cash and cash equivalents 25 (25.2) (7.8)
----- -----
(28.0) 11.9
----- -----
</TABLE>
The notes on pages 34 to 56 form an integral part of the accounts.
<PAGE>
TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31st March 1995
<TABLE>
<CAPTION>
1995 1994
as restated
(Pounds) million (Pounds) million
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit attributable to shareholders 63.9 44.4
Unrealised deficit on revaluations (18.8) -
-------------- -------------
45.1 44.4
Currency translation differences on foreign currency net investments (2.0) 0.4
-------------- -------------
Total recognised gains and losses relating to the year 43.1 44.8
-------------
Prior year adjustment (note 12(c) (iii) on page 45) (29.2)
--------------
TOTAL GAINS AND LOSSES RECOGNISED SINCE LAST ANNUAL REPORT 40.2
--------------
<CAPTION>
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 31st March 1995
<CAPTION>
1995 1994
as restated
(Pounds) million (Pounds) million
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reported profit on ordinary activities before taxation 95.4 65.3
Realisation of revaluation gains of previous years 2.9 2.9
Difference between historical cost depreciation and actual 0.2 0.3
-------------- -------------
HISTORICAL COST PROFIT BEFORE TAXATION 98.5 68.5
-------------- -------------
HISTORICAL COST RETAINED PROFIT 41.1 25.8
-------------- -------------
<CAPTION>
MOVEMENT IN SHAREHOLDERS' FUNDS
for the year ended 31st March 1995
1995 1994
as restated
(Pounds) million (Pounds) million
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit attributable to shareholders 63.9 44.4
Dividends (25.9) (21.8)
Cash alternative value to enhanced scrip dividend for 1993 - 12.6
-------------- -------------
38.0 35.2
Other recognised gains and losses relating to the year (20.8) 0.4
New share capital subscribed 1.3 4.1
Goodwill charged on business disposals - 0.1
Goodwill written off in respect of acquisitions and joint ventures (3.8) (1.1)
Goodwill written off on formation of Cookson Matthey Ceramics plc (3.2) -
-------------- -------------
Net addition to shareholders' funds 11.5 38.7
Opening shareholders' funds (originally (pound) 371.6 million
before deducting prior year adjustment of (pound) 2.9 million) 368.7 330.0
-------------- -------------
CLOSING SHAREHOLDERS' FUNDS 380.2 368.7
-------------- -------------
</TABLE>
[FN]
The notes on pages 34 to 56 form an integral part of the accounts.
<PAGE>
1. Accounting convention
The accounts are preapred in accordance with applicable accounting standards
under the historical cost convention as modified by the revaluation of certain
land and buildings.
2. Basis of consolidation
The consolidated accounts comprise the accounts of the parent company and all
its subsidiary undertakings and include the group's interest in associated
undertakings.
The results of companies acquired or disposed of in the year are dealt with from
group to the effective date of acquisition or disposal respectively. The net
assets of companies acquired are incorporated in the consolidated accounts at
their fair values to the group at the date of acquisition. Goodwill arising on
acquisitions is taken to reserves.
The parent company has not presented its own profit and loss account as
permitted by Section 230 of the Companies Act 1985.
3. Foreign currencies
Profit and loss accounts in foreign currencies and cash flows included in the
cash flow statement are translated into sterling at average exchange rates for
the year. Foreign currency assets and liabilities are translated into sterling
at the rates of exchange at the balance sheet date. Gains or losses arising on
the translation of the net assets of overseas subsidiaries and associated
undertakings are taken to reserves, less exchange differences arising on related
foreign currency borrowings. Other exchange differences are taken to the
profit and loss account.
4. Research and development
Research and development expenditure is charged against profits in the year it
is incurred.
5. Tangible fixed assets
(I) Depreciation: Freehold land and certain office buildings are not
depreciated. The group's policy is to maintain these properties in such
condition that their value does not diminish and the cost of maintenance is
charged to operating profit.
Other fixed assets are depreciated on a straight line basis at annual rates
which vary according to the class of asset, but are typically:
Leasehold property (or at higher rates
based on the life of the lease) 2%
Freehold buildings 3.33%
Plant and equipment 10%-33%
(II) Leases: The cost of assets held under finance leases is included under
tangible fixed assets and the capital element of future lease payments is
included in creditors. Depreciation is provided in accordance with the group's
accounting policy for the class of asset concerned. Lease payments are treated
as consisting of capital and interest elements and the interest is charged to
the profit and loss account using the annuity method. Rentals under operating
leases are expenses as incurred.
(III) Grants in respect of capital expenditure: Grants received in respect of
capital expenditure are included in creditors and released to the profit and
loss account in equal instalments over the expected useful lives of the related
assets.
6. Stocks
(I) Precious metal stocks: Stocks of gold, silver and platinum group metals are
valued according to the source from which the metal is obtained. Metal which has
been purchased and committed to future sales to customers or hedged in metal
markets is valued at the price at which it is contractually committed or hedged,
adjusted for unexpired contango. Leased metal is valued at market prices at the
balance sheet date. Other precious metal stocks owned by the group, which are
unhedged, are valued at the lower of cost and net realisable value. Because of
the volatility of precious metal prices, net realisable value is generally taken
to be the lower of market prices and average prices ruling over the last five
years.
(II) Other stocks: These are valued at the lower of cost, including
attributable overheads, and net realisable value.
7. Forward contracts
Commitments arising from forward contracts entered into in the ordinary course
of business are not included in the balance sheet.
8. Deferred taxation
Deferred taxation is provided using the liability method on all timing
differences to the extent that they are expected to reverse in the foreseeable
future.
9. Pensions and other retirement benefits
The group operates a number of contributory and
non-contributory schemes, mainly of the defined benefit type, which require
contributions to be made to separately administered funds. The cost of these
schemes is charged to profit and loss account over the service lives of
employees in accordance with the advice of the schemes' independent actuaries.
Variations from the regular cost are spread over the average expected remaining
service lives of current employees.
Post-retirement health care benefits in the US are accounted for under FAS 106.
In accordance with this standard, the cost of post-retirement health care
benefits is charged to profit and loss account on a systematic basis over the
expected service lives of employees. The actuarial liability for the cost of
these benefits is fully provided for in the balance sheet.
10. Change of accounting policies
In accordance with the Accounting Standards Board Urgent Issues Task Force
Abstract 6, the cost of post-retirement medical benefits is charged to profit
and loss account on a systematic basis over the expected service lives of
employees. The actuarial liability for the cost of these benefits is fully
provided for in the balance sheet. The liability arising from past service has
been recognised as a prior year adjustment. The change of policy brings the
accounting treatment of post-retirement medical benefits in the UK and elsewhere
into line with the policy already in place in the US.
11. Changes in presentation
(i) Precious metal leases: Precious metal leases are now shown as a separate
category on the face of the balance sheet.
(ii) Minority interests: These have been shown separately on the face of the
profit and loss account and balance sheet. In prior years minority interests
were not sufficiently material to be shown separately and were included in
administrative expenses in the profit and loss account and in other long term
creditors in the balance sheet.
<PAGE>
[CAPTION]
Notes on the Accounts
for the year ended 31st March 1995
1. Cookson Matthey Ceramics plc
--------------------------------------------------------------------------------
On 17th March 1994, the group announced the formation of a joint venture,
Cookson Matthey Ceramics plc, incorporated in England, combining Johnson
Matthey's Colour and Print Division with Cookson Group plc's Ceramics Supplies
and Minerals business. Cookson Matthey Ceramics plc commenced operations on 1st
July 1994 and has been accounted for as an associated undertaking.
The results of the joint venture for the nine months to 31st March 1995 were as
follows:
<TABLE>
<CAPTION>
(Pounds) million
<S> <C>
Turnover 194.1
Cost of materials sold (77.7)
------------
Net revenues 116.4
Other cost of sales 59.5
------------
Gross profit 56.9
Distribution costs (20.1)
Administrative expenses (15.0)
Share of operating profits of associated undertakings 0.7
------------
Operating profit 22.5
Provision for fundamental restructuring (11.3)
Net interest (8.3)
------------
Profit on ordinary activities before taxation 2.9
Taxation (3.1)
------------
Loss after taxation (0.2)
Minority interests (0.9)
------------
Loss attributable to shareholders (1.1)
------------
</TABLE>
[CAPTION]
The assets and liabilities of Cookson Matthey Ceramics plc as at 31st March 1995
comprise:
<TABLE>
(Pounds) million
<S> <C>
Tangible fixed assets 86.7
Investments 3.3
Stocks 52.1
Debtors 78.7
Cash 5.1
Creditors and provisions (70.1)
Precious metal leases (5.6)
Loans from shareholders (217.2)
Bank loans and overdrafts (8.8)
Minority interests (8.7)
------------
Shareholders' funds 84.5
------------
</TABLE>
The group and Cookson Group plc have severally and equally guaranteed certain of
Cookson Matthey Ceramics plc's loans, overdrafts and obligations to HM Customs
and Excise. The estimated contingent liability of the group under these
guarantees at 31st March 1995 was (Pounds) 1.5 million.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
<TABLE>
<CAPTION>
1995 1994
as restated
2. Operating profit (Pounds) million (Pounds) million
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Turnover 2,177.8 1,955.0
Cost of materials sold (1,822.7) (1,564.0)
--------- --------
Net revenues 355.1 391.0
Other cost of sales (173.1) (195.4)
--------- --------
Gross profit 182.0 195.6
Distribution costs (43.0) (55.0)
Administrative expenses (52.2) (61.0)
Share of operating profits of associated undertakings 13.6 2.0
--------- --------
Operating profit 100.4 81.6
--------- --------
<CAPTION>
1995 1994
3. Discontinued operations (Pounds) million (Pounds) million
-----------------------------------------------------------------------------------------------------------------------------------
During the year the group sold its interest in Metalli Preziosi SpA, and during 1993/94 sold
its UK and Irish Jewellery business. The contribution of these businesses to the profit and
loss account was as follows:
<S> <C> <C>
Turnover 13.7 110.7
Cost of materials sold (11.7) (92.0)
--------- ---------
Net revenues 2.0 18.7
Other cost of sales (1.3) (10.3)
--------- ---------
Gross profit 0.7 8.4
Distribution costs (0.3) (3.8)
Administration expenses (0.4) (4.5)
--------- ---------
Operating profit - 0.1
Metal interest - (0.2)
--------- ---------
Profit after metal interest - (0.1)
--------- ---------
<CAPTION>
1995 1994
4. Exceptional items (Pounds) million (Pounds) million
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Loss on disposal of businesses
Profit on disposal of UK and Irish jewellery business - 2.3
Provision for loss on sale of Metalli Preziosi SpA - (9.0)
Loss on sale of Metalli Preziosi SpA (9.0) -
Utilisation of prior year provision 9.0 -
--------- ---------
- (6.7)
--------- ---------
</TABLE>
Provision for restructuring in joint venture
The provision of (Pounds) 0.7 million in 1995 represents the group's remaining
share of the provision for fundamental restructuring of Cookson Matthey Ceramics
plc ((Pounds) 5.0 million was provided in 1994). The group's share of Cookson
Matthey Ceramics plc's expenditure on fundamental restructuring for the year to
31st March 1995 was (Pounds) 2.1 million.
Sales of fixed assets
Sales of fixed assets resulted in a loss of (Pounds) 0.4 million (1994 (Pounds)
0.2 million). Gross profits and loses were not sufficiently material to warrant
separate disclosure on the face of the profit and loss account.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
<TABLE>
<CAPTION>
1995 1994
5. Net interest (Pounds) million (Pounds) million
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
On loans repayable after more than five years (1.3) (1.1)
On loans wholly repayable within five years (5.8) (8.4)
On finance leases repayable within five years - (0.1)
-------------- --------------
(7.1) (9.6)
Interest receivable form Cookson Matthey Ceramics plc 3.9 -
Other interest receivable 3.1 5.0
-------------- --------------
Net interest - group (0.1) (4.6)
Share of net interest of associated undertakings - payable to group (3.9) -
Share of net interest of associated undertakings - other (0.3) -
-------------- --------------
Net interest (4.3) (4.6)
-------------- --------------
</TABLE>
<TABLE>
<CAPTION>
1995 1994
6. Profit on ordinary activities before taxation (Pounds) million (Pounds) million
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit on ordinary activities before taxation is arrived at after charging/crediting:
Research and development 35.3 28.5
less share of Cookson Matthey Ceramics plc (2.2) -
less external funding received (4.7) (3.7)
-------------- --------------
Net research and development 28.4 24.8
-------------- --------------
Depreciation
- on owned assets 27.8 29.7
- on leased assets - 1.0
Auditors' remuneration 0.8 0.9
Others fees paid to auditors - United Kingdom 0.8 0.3
- rest of world 0.3 0.1
Operating lease rentals
- on plant and machinery 3.1 3.2
- on other operating leases 4.4 4.4
Director's compensation for loss of office - 0.3
Directors' remuneration (see note 11(a) on page 41)
- fees 0.1 0.1
- other emoluments 1.4 1.5
-------------- --------------
1.5 1.6
-------------- --------------
</TABLE>
<TABLE>
<CAPTION>
1995 1994
7. Dividends (Pounds) million (Pounds) million
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.5% Cumulative preference dividend paid (Pounds) 10,500 (1994) (Pounds) 10,500) - -
8% Convertible cumulative preference dividend paid (pound) 10,622 (1994 (Pounds) 22,606) - -
Interim ordinary dividend paid - 4.2 pence per share (1994) 3.4 pence per share) 8.0 6.5
Final ordinary dividend proposed - 9.3 pence per share (1994 8.0 pence per share) 17.9 15.3
-------------- --------------
Total dividends 25.9 21.8
-------------- --------------
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
8. Setmental information continued
<TABLE>
<CAPTION>
Total sales Inter-segmented sales Sales to third parties
1995 1994 1995 1994 1995 1994
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
Geographical analysis by origin million million million million million million
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Europe 1,440.0 1,155.2 238.0 198.1 1,202.0 957.1
North America 724.3 667.1 32.1 63.1 692.2 604.0
Asia and Pacific 343.1 268.0 1.2 0.8 341.9 267.2
Africa, Middle East and others 25.6 16.4 0.5 0.4 25.1 16.0
------- ------- ------ ------ ------- -------
2,533.0 2,106.7 271.8 262.4 2,261.2 1,844.3
Discontinued operations 14.7 116.4 1.0 5.7 13.7 110.7
------- ------- ------ ------ ------- -------
2,547.7 2,223.1 272.8 268.1 2,274.9 1,955.0
------- ------- ------ ------ ------- -------
Less share of Cookson Matthey
Ceramics plc turnover (97.1) -
------- -------
Total group turnover 2,177.8 1,955.0
------- -------
Operating profit Profit after metal interest Segment net assets
1995 1994 1995 1994 1995 1994
as restated as restated as restated
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
Geographical analysis million million million million million million
------------------------------------------------------------------------------------------------------------------------------------
Europe 42.6 28.9 46.1 29.1 298.2 265.1
North America 47.4 45.0 46.5 44.6 98.7 96.1
Asia and Pacific 6.4 5.9 6.0 5.7 71.7 62.2
Africa, Middle East and others 4.0 1.7 3.8 1.6 12.0 8.8
------ ------- ------ ---- ------ ------
100.4 81.5 102.4 81.0 480.6 432.3
Discontinued operations - 0.1 - 0.1 - 13.9
------ ------- ------ ---- ------ ------
100.4 81.6 102.4 81.1 480.6 446.2
Loss on disposal of businesses - (6.7)
Provision for restructuring in joint venture (0.7) (5.0)
Money interest (6.3) (4.1)
---- ----
Profit on ordinary activities before taxation 95.4 65.3
---- ----
Net borrowings (102.4) (76.1)
------ -----
Net assets 378.2 370.1
----- -----
</TABLE>
Turnover comprises all invoiced sales of goods and services exclusive of sales
taxes. Turnover by destination relating to the United Kingdom amounted to
(Pounds) 519.6 million (1994 (Pounds) 472.7 million).
Operating profit, which is before exceptional items, is inclusive of the group's
share of profits of associated undertakings.
Metal interest includes interest payable on metal leases less net contangos
receivable on forward contracts.
The segmental information includes the group's share of Cookson Matthey Ceramics
plc's turnover and operating profit.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
9. Earnings per ordinary share
-------------------------------------------------------------------------------
Profit attributable to shareholders, less preference dividends, is (Pounds) 63.9
million (1994 (Pounds) 44.4 million as restated). This is divided by the
weighted average number of shares in issue calculated as 191,329,380 (1994
188,744,436) to give basic earnings per ordinary share of 33.4 pence (1994 23.5
pence as restated). The effect on earnings per share of the exercise of
outstanding share options would not be material.
Excluding exceptional items and the tax thereon earnings per share were 33.7
pence. The equivalent figure for 1994, adjusted for tax saved on the enhanced
scrip dividend, was 27.4 pence.
<TABLE>
<CAPTION>
1995 1994
as restated
(Pounds) (Pounds)
million million
<S> <C> <C>
Attributable profit 63.9 44.4
Exceptional items 0.7 11.7
Tax thereon (0.1) (0.6)
ACT saved on enhanced scrip dividend - (3.7)
------- ------
Adjusted profit 64.5 51.8
------- ------
Earnings per share excluding exceptional items 33.7p 27.4p
<CAPTION>
1995 1994
Pounds Pounds Pounds Pounds
10. Taxation million million million million
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United Kingdom
Corporation tax at 33% (1994 33%) 16.7 12.1
Double taxation relief (10.4) (8.8)
Net advance corporation tax written off/ (set off) in year 0.6 (0.5)
----- ----
Current taxation for year 6.9 2.8
Deferred taxation for year 1.1 (0.2)
----- ----
8.0 2.6
Overseas
Taxation on income for the year 13.0 16.1
Withholding tax deductions on overseas income 0.9 1.1
---- ----
Current taxation for year 13.9 17.2
Deferred taxation for year 5.9 (0.1)
---- ----
19.8 17.1
Associated undertakings 2.7 1.0
----- ----
Total taxation 30.5 20.7
----- ----
Taxation on exceptional items and scrip dividend included above:
On provision for restructuring in joint venture (0.1) (0.6)
ACT saved on enhanced scrip dividend - (3.7)
----- ----
(0.1) (4.3)
----- ----
</TABLE>
The group's underlying average tax rate (adjusted for exceptional items and ACT
saved on enhanced scrip dividend) was 31.8% (1994 32.5%).
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
11. Directors
11(a) Directors' emoluments
Remuneration policy
The Management Development and Remuneration Committee ("MDRC") decides the
terms of employment of the executive directors. It is also responsible for
approving the remuneration of the senior management of the group.
The MDRC comprises all the non-executive directors and the Chairman and Chief
Executive. It is chaired by Mr H M P Miles.
The emoluments of the executive directors consist of the following:
(i) A basic salary which is in line with the median market salary for each
director's responsibilities as advised by independent consultants.
(ii) An annual bonus which is paid as a percentage of basic salary under the
terms of the company's Executive Compensation Plan (which also applies to the
company's 125 or so most senior executives). The executive directors' bonus
award is based on group profit before tax compared with the annual budget. The
bonuses paid to the executive directors in 1995/95 in respect of 1993/94's
results averaged 37% of salary at 31st March 1994.
(iii) A term plan. During 1994/95 a term bonus plan ("the Plan") was introduced
to motivate and reward the most senior executives of the group for the
achievement of the group's longer term objectives and enhanced shareholder
value. For the first year of the Plan (1995) the MDRC will award shares, based
on performance against 1994/95 budgeted profit before tax up to a maximum of 25%
of an executive's salary, which will be held in trust until 1997. The amount of
shares awarded in 1997 will depend on share price performance against the market
on a sliding scale. No award will be made if Johnson Matthey's share price
against the FTSE 350 falls below the 7th decile. Subsequent awards will be made
based on the company's average compound growth in earnings per share (excluding
exceptional profits and losses) for the three years from 1996 to 1998. No awards
will be made if earnings per share compound growth over the three years is less
than 10% pa. Maximum awards of up to 50% of salary will be made for compound
growth equal to or greater than 15% pa.
(iv) Share options. These are granted under the approved scheme adopted in
September 1985 in a series of tranches up to the maximum permitted of 4 times
relevant emoluments. A new scheme will be introduced in July 1995, subject to
the approval of shareholders. Mr. D J Davies holds stock appreciation rights
under a share price related cash bonus scheme whose terms are similar to those
of the share option scheme.
(v) Pensions. All the executive directors are members of the company's UK
pension scheme. The only non-executive director to have any pension entitlement
is Mr. J A Stevenson who is a pensioner of the UK scheme. Under the UK scheme
members are entitled to a maximum pension based on two-thirds of their final
pensionable salary subject to Inland Revenue limits. Mr. D J Davies and Mr J N
Sheldrick who joined the pension scheme after 1989 and are therefore subject to
the Inland Revenue earnings limit for payment of pensions from an approved
scheme receive a pension supplement. The cost to the company of benefits
provided by the UK scheme to all members not subject to earnings limits averages
18% of basic salary although the company is currently not required to make
contributions.
(vi) Other benefits available to the executive directors are private
health-care insurance, company cars and membership of the Johnson Matthey
Employee Share Participation Scheme which is open to all employees in most of
the countries in which Johnson Matthey operates.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
II(A)Directors' emoluments continued
--------------------------------------------------------------------------------
Emoluments
In March 1994 the Chairman assumed the responsibilities of the Chief Executive.
In 1995 the Chairman was the highest paid director and his emoluments were as
follows:
<TABLE>
<CAPTION>
1995 1994
(Pounds) (Pounds)
<S> <C> <C>
Emoluments 345,155 236,111
Performance-related bonus (in respect of prior year) 85,566 74,424
------- -------
430,721 310,535
------- -------
</TABLE>
The emoluments of the highest paid director in 1994 were as follows:
<TABLE>
<CAPTION>
1994
(Pounds)
<S> <C>
Emoluments 235,714
Performance-related bonus (in respect of 1992/93) 80,493
Performance-related bonus (in respect of 1993/94) 55,000
-------
371,207
-------
</TABLE>
In addition this director received (Pounds) 338,000 compensation for loss of
office.
As indicated in note 11(a)(v) above the company makes no pension contributions
to its UK pension scheme, of which the executive directors are members.
The emoluments of the directors, including annual bonuses per note 11(a)(ii)
above of (Pounds) 282,904 (1994 (Pounds) 342,398), were (Pounds) 1,487,836
(1994 (Pounds) 1,505,248) and fell within the following bands:
<TABLE>
<CAPTION>
1995 1994 1995 1994
(POUNDS) NUMBER NUMBER (POUNDS) NUMBER NUMBER
<C> <C> <C> <C> <C> <C>
430,001 - 435,000 1 - 195,001 - 200,000 1 -
370,001 - 375,000 - 1 185,001 - 190,000 - 1
310,001 - 315,000 - 1 180,001 - 185,000 - 1
255,001 - 260,000 1 - 30,001 - 35,000 1 -
240,001 - 245,000 1 - 15,001 - 20,000 5 4
225,001 - 230,000 1 - 10,001 - 15,000 - 2
205,001 - 210,000 - 1 0 - 5,000 - 1
200,001 - 205,000 - 1
</TABLE>
Service Contracts
The Chairman and Chief Executive's contract is subject to eleven months' notice.
The other executive directors are employed on rolling contracts subject to two
years' notice at any time. Normal retirement age for executive directors is 60.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
11B Directors' interests
-------------------------------------------------------------------------------
The interests of the directors in the shares of the company, according to the
register required to be kept by Section 325(1) of the Companies Act 1985, at
31st March 1995 were:
<TABLE>
<CAPTION>
Johnson Matthey Ordinary Shares
1995 1994
<S> <C> <C>
D J Davies 21,705 18,828
The Hon G H Wilson 511 511
P C D Burnell 511 511
C R N Clark 10,479 9,762
H E Fitzgibbons 1,000 1,000
H M P Miles OBE 500 500
P F Retief 500 500
J N Sheldrick 33,135 30,383
J A Stevenson 11,230 11,230
J G Thorburn 20,580 21,686
D G Titcombe 26,798 23,996
</TABLE>
As at 31st March 1995 individual holdings under the Inland Revenue approved
share option scheme (or in the case of Mr. D J Davies the stock appreciation
rights scheme) were as set out below. Options to subscribe for ordinary shares
in the company are not granted to the non-executive directors.
<TABLE>
<CAPTION>
1 April Granted Exercised 31 March Average
1994 in year in year 1995 grant price
<S> <C> <C> <C> <C> <C>
D J Davies 326,986 60,000 - 386,986 (pound) 3.10
C R N Clark 77,103 23,400 8,665* 91,838 (pound) 4.17
J N Sheldrick 73,411 31,900 - 105,311 (pound) 4.28
I G Thorburn 103,468 10,200 - 113,668 (pound) 3.52
D G Titcombe 66,573 23,400 - 89,973 (pound) 4.16
</TABLE>
*3,627 were granted at 398.99p and 5,038 at 428.76p. The market price on
exercise was 600p.
Directors' interests at 1st June 1995 were unchanged from those listed above
with the following exceptions:
The Trustee of the UK Employee Share Participation Scheme and the Johnson
Matthey POP Manager have purchased on behalf of Messrs D J Davies, C R N
Clark, J N Sheldrick, I G Thorburn and D G Titcombe a further 485, 484, 482,
411, and 479 ordinary shares respectively.
On 6th April 1995 Mr I G Thorburn disposed of 5,246 ordinary shares.
No director had an interest in the 3.5% preference shares at 1st April 1994 or
31st March 1995.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
<TABLE>
<CAPTION>
12. Employee information
12(A)Employee numbers 1995 1994
--------------------------------------------------------------------------------
<S> <C> <C>
The average weekly number of employees during the
year was as follows:
Materials Technology 2,507 2,807
Catalytic Systems 1,103 1,010
Precious Metals 625 625
Colour and Print/Cookson Matthey Ceramics plc 1,477 1,572
Research and Corporate 273 273
------ -----
5,985 6,287
Less share of Cookson Matthey Ceramics plc (989) -
------ -----
Average number of employees 4,996 6,287
------ -----
Actual number of employees at 31st March 5,912 6,101
Less share of Cookson Matthey Ceramics plc (1,438) -
------ -----
Actual number of employees at 31st March 4,474 6,101
------ -----
The number of temporary employees included above at
31st March 1995 was 253 (1994 275).
</TABLE>
<TABLE>
<CAPTION>
1995 1994
as restated
12(B)Employee costs (Pounds) million
--------------------------------------------------------------------------------
<S> <C> <C>
Wages and salaries 111.2 136.0
Social security costs 13.6 17.6
Other pension costs (8.0) (3.8)
----- -----
Total employee costs 116.8 149.8
----- -----
</TABLE>
12(C) Retirement benefits
--------------------------------------------------------------------------------
(I) United Kingdom pension scheme
The group's UK pension scheme is of the defined benefit type which requires
contributions to be made to a separately administered fund. At 1st April 1994,
the date of the latest actuarial valuation, the market value of the UK scheme's
assets was (Pounds)376.9 million, the actuarial value of which represented 157%
of the liability for benefits that had accrued to that date, making full
allowance for future salary and pension increases and after taking into account
the special increase in pensions introduced as of 1st May 1995. This represents
an actuarial surplus of (Pounds)132.0 million which, following actuarial
recommendations, has permitted the company to suspend contributions for the
forseeable future. A surplus cannot be refunded to the company except by
dissolution of the scheme in accordance with the rules of the scheme and
relevant legislation. Rates used at the last actuarial valuation at 1st April
1994 were as follows:
per annum
Long term rate of investment return 8.0%
Dividend increase rate 4.0%
General salary and wage inflation rate 6.0%
Pension increase rate 4.0%
In accordance with the applicable accounting standard, the surplus on the
group's UK pension fund has been spread over the average of the expected
remaining service lives of current employees (12 years) as a variation from
regular cost. The regular pension cost is assessed using the projected unit
method.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
12(c) Retirement benefits continued
(ii) Foreign schemes
Pension costs relating to foreign schemes are charged in accordance with local
best practice using different accounting policies. The group's largest foreign
scheme is in the US which is of the defined benefit type and which requires
contributions to be made to a separately administered fund. This scheme is
accounted for using the applicable US accounting standard. The cost of obtaining
actuarial valuations for the purpose of adjusting to the applicable UK
accounting standard is considered to be out of proportion to the benefits to be
gained.
(iii) Other retirement benefits
In the US the group provides post-retirement medical benefits to pensioners.
These costs are charged on an accruals basis similar to that used for pensions.
In the current year the method of accounting for all other employees' post-
retirement medical benefits has been changed to an accruals basis similar to
that used for pensions. The actuarial liability in respect of past service of
(pound) 2.9 million has been recognised as a prior year adjustment.
(iv) Profit and loss account and balance sheet impact of
providing retirement benefits
The effect of providing pensions and other retirement benefits on operating
profit was as follows:
<TABLE>
<CAPTION>
1995 1994
as restated
(Pounds) million (Pounds) million
<S> <C> <C>
United Kingdom
Regular pension cost (4.6) (6.5)
Variation from regular cost 13.3 11.2
Interest on prepayment 2.9 2.5
Cost of post-retirement medical benefits (0.3) (0.3)
----- -----
11.3 6.9
Overseas
Cost of foreign pension schemes (2.4) (2.5)
Cost of post-retirement medical benefits (0.9) (1.0)
----- -----
Total cost of retirement benefits 8.0 3.4
----- -----
</TABLE>
The following prepayments and provisions relating to pension schemes and other
post-retirement post-retirement benefits are included in the group and parent
company's balance sheets:
<TABLE>
<CAPTION>
Group Parent company
1995 1994 1995 1994
as restated as restated
(Pounds) million (Pounds) million (Pounds) million (Pounds) million
<S> <C> <C> <C> <C>
Prepaid pension costs in the UK 48.3 36.6 48.3 36.6
Provision for foreign pensions 4.9 8.2 - -
Provision for post-retirement medical benefits-overseas 10.9 11.4 - -
Provision for post-retirement medical benefits-UK 2.5 2.5 2.5 2.5
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
13. Fixed assets-tangible assets
13(A) Group
<TABLE>
<CAPTION> Freehold
land & Short Plant &
buildings leasehold machinery Total
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
<S> <C> <C> <C> <C>
Cost/Valuation
At beginning of year 162.1 13.4 330.7 506.2
Purchases 6.2 0.1 41.9 48.2
Purchase of subsidiary undertakings - 0.9 2.1 3.0
Business disposals (3.5) - (11.5) (15.0)
Disposals (0.7) - (10.1) (10.8)
Revaluations (33.1) - - (33.1)
Transfers to Cookson Matthey Ceramics plc (20.5) - (53.9) (74.4)
Exchange adjustments (3.2) 0.4 (10.4) (13.2)
------ ------ ------ ------
At end of year 107.3 14.8 288.8 410.9
------ ------ ------ ------
Depreciation
At beginning of year 20.1 4.2 158.8 183.1
Charge for the year 2.9 0.8 24.1 27.8
Business disposals (1.4) - (7.7) (9.1)
Disposals (0.1) - (9.1) (9.2)
Revaluations (14.3) - - (14.3)
Transfers to Cookson Matthey Ceramics pls (3.4) - (30.5) (33.9)
Exchange adjustments (1.0) (0.1) (5.1) (6.2)
------ ------ ------ ------
At end of year 2.8 4.9 130.5 138.2
------ ------ ------ ------
Net book value at 31st March 1995 104.5 9.9 158.3 272.7
------ ------ ------ ------
Net book value at 31st March 1994 142.0 9.2 171.9 323.1
------ ------ ------ ------
Historical cost at 31st March 1995 110.5 14.4 288.8 413.7
Accumulated historical depreciation 22.4 4.7 130.5 157.6
------ ------ ------ ------
Net historical cost at 31st March 1995 88.1 9.7 158.3 256.1
------ ------ ------ ------
Freehold land and building of (Pounds) 39.1 million included above are not depreciated.
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
<TABLE>
<CAPTION>
13(B) Parent Company
Freehold
land & Short Plant &
buildings leasehold machinery Total
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
<S> <C> <C> <C> <C>
Cost/Valuation
At beginning of year 67.8 3.2 77.5 148.5
Purchased 2.0 - 11.5 13.5
Disposals (0.1) - (5.9) (6.0)
Revaluation (25.9) - - (25.9)
----- --- ---- -----
At end of year 43.8 3.2 83.1 130.1
----- --- ---- -----
Depreciation
At beginning of year 4.6 1.5 41.1 47.2
Charge for the year 0.8 0.3 5.6 6.7
Disposals - - (5.7) (5.7)
Revaluations (5.1) - - (5.1)
----- --- ---- -----
At end of year 0.3 1.8 41.0 43.1
----- --- ---- -----
Net book value at 31st March 1995 43.5 1.4 42.1 87.0
----- --- ---- -----
Net book value at 31st March 1994 63.2 1.7 36.4 101.3
----- --- ---- -----
Historical cost at 31st March 1995 44.4 2.9 83.1 10.4
Accumulated historical depreciation 6.8 1.6 41.0 49.4
----- --- ---- -----
Net historical cost at 31st March 1995 37.6 1.3 42.1 81.0
----- --- ---- -----
</TABLE>
Freehold land and buildings at (Pounds) 30.5 million included above are not
depreciated.
13(C) Asset revaluations
--------------------------------------------------------------------------------
Group freehold land and buildings of (Pounds) 72.6 million and short leasehold
of (Pounds) 0.1 million (parent company (Pounds) 41.1 million and (Pounds)
0.1 million respectively) were valued in March 1995 by Jones Lang Wooton,
Chartered Surveyors, independent professional valuers, on the basis of open
market value for existing use or depreciated replacement cost whichever is
considered the more appropriate basis of valuation in accordance with the
RICS Statements of Asset Valuation Practice and Guidance Notes. Assets valued
at depreciated replacement cost amounted to (Pounds) 23.7 million in the group
and (Pounds) 4.7 million in the company (1994 (Pounds) 49.5 million and
(Pounds) 14.7 million respectively).
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
<TABLE>
<CAPTION>
14. Fixed assets - investments
14(A) GROUP
------------------------------------------------------------------------------------------------------------------------------------
Share of
net assets of Loans to Investment in
Cookson Matthey Cookson Matthey other associated
Ceramics plc Ceramics plc undertakings Total
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
<C> <C> <C> <C>
At beginning of year - - 1.1 1.1
Formation of Cookson Matthey Ceramics plc (41.2) 111.6 - 70.4
Additions to other associated undertakings - - 1.2 1.2
Loans repaid - (0.5) - (0.5)
Exchange adjustments (0.5) - (0.2) (0.7)
Profits retained for the year (0.5) - (0.1) (0.6)
------ ------ ------ ------
AT 31ST MARCH 1995 (42.2) 111.1 2.0 70.9
------ ------ ------ ------
Percentage
holding of Principal
Issued ordinary operating
share capital Currency share capital country
'000 %
Associated undertakings
Arora-Matthey Limited 9,960 Rupee 40 India
Matthey Rustenburg Refiners (Pty) Limited 1,360 Rand 49 S.Africa
Johnson Matthey HICOM Sdn Bhdk * 8,000 Ringitt 50 Malaysia
Cookson Matthey Ceramics plc * 69,000 Sterling 50 England
KonserQ Limited * 1,001 Sterling 50 England
</TABLE>
The cost of investment in associated undertakings amounted to (Pounds) 75.8
million (1994 (Pounds) 1.0 million).
Loans to Cookson Matthey Ceramics plc include debenture loans of (Pounds)
103.5 million.
The principal operating country is also the country of incorporation for each
associated undertaking.
*Investments directly held by parent company.
14(B) Parent company
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Cost of
Investment in Loans to Investment in investment in Equity loans
Cookson Matthey Cookson Matthey other associated subsidiary to subsidiary
Ceramics plc Ceramics plc undertakings undertakings undertakings Total
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million million
<C> <C> <C> <C> <C> <C>
At beginning of year - - - 17.8 5.7 23.5
Additions 36.1 111.6 1.2 - - 148.9
Disposals - - - (13.2) - (13.2)
Loans repaid - (0.5) - - (5.7) (6.2)
------ ------ ------ ------ ------ ------
At 31st March 1995 36.1 111.1 1.2 4.6 - 153.0
------ ------ ------ ------ ------ ------
</TABLE>
The principal subsidiary undertakings are shown on page 57.
The cost of investment in associated undertakings amounted to (Pounds) 140.9
million (1994 nil).
<PAGE>
Notes on the Accounts
for the year ended 31st march 1995
<TABLE>
<CAPTION>
Group Parent company
1995 1994 1995 1994
(Pounds) (Pounds) (Pounds) (Pounds)
15. Stocks million million million million
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Raw materials and consumables 17.1 20.6 5.6 4.6
Work in progress
Precious metals 100.8 88.0 97.1 74.7
Other 9.9 11.2 3.1 3.2
Finished goods and goods for sale 25.8 37.1 7.8 4.8
----- ----- ----- -----
Total stocks 153.5 156.9 113.6 87.3
----- ----- ----- -----
The group also holds customers' materials in the process of refining and
fabrication and for other reasons.
Parent company precious metals includes net metal lent to subsidiary and
associated undertakings.
<CAPTION>
Group Parent company
1995 1994 1995 1994
(Pounds) (Pounds) (Pounds) (Pounds)
16. Debtors million million million million
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debtors: due within one year
Trade debtors 107.3 136.2 27.6 29.4
Amounts owed by subsidiary undertakings -- -- 194.7 251.8
Amounts owed by associated undertakings 4.5 0.1 4.3 0.1
Other debtors 14.9 18.9 7.4 10.2
Prepayments and accrued income 13.6 13.1 6.4 4.7
Debtors: due after one year
Prepaid pensions 48.3 36.6 48.3 36.6
Amounts owed by subsidiary undertakings -- -- 30.0 71.0
----- ----- ----- -----
Other debtors 1.1 1.0 -- --
----- ----- ----- -----
49.4 37.6 78.3 107.6
----- ----- ----- -----
<CAPTION>
Group Parent company
1994 as 1994 as
1995 restated 1995 restated
(Pounds) (Pounds) (Pounds) (Pounds)
17. Borrowings million million million million
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Borrowings falling due after more than one
year
Bank and other loans repayable by
instalments
After five years 7.8 8.6 -- --
From two to five years 3.6 3.6 -- --
From one to two years 1.2 1.2 -- --
Bank and other loans repayable otherwise
than by instalments
After five years 5.2 5.8 -- --
From two to five years 17.4 28.2 17.4 28.2
From one to two years 16.5 13.8 16.5 13.7
----- ----- ----- -----
Borrowings falling due after more than one
year 51.7 61.2 33.9 41.9
----- ----- ----- -----
Borrowings falling due within one year
Bank and other loans 90.0 52.3 53.3 28.9
----- ----- ----- -----
Total borrowings 141.7 113.5 87.2 70.8
Less cash and deposits 39.3 37.4 12.1 9.5
----- ----- ----- -----
Net borrowings 102.4 76.1 75.1 61.3
----- ----- ----- -----
</TABLE>
Bank and other loans include (pound)11.5 million (1994 (pound)10.8 million)
secured on the assets of a subsidiary undertaking.
The loans are demonimated in various currencies and bear interest at commercial
rates. The aggregate amount of loans which are repayable in instalments is
(pound) 14.0 million (1994 (pound) 13.8 million).
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
18. Precious metal leases
--------------------------------------------------------------------------------
Precious metal leases are rental and consignment stock arrangements under which
banks provide the group with precious metals for a specified period and for
which the group pays a fee. The group holds sufficient precious metal stocks to
meet all the obligations under these lease arrangements as they come due.
<TABLE>
<CAPTION>
Group Parent company
1995 1994 1995 1994
as restated
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
Amounts falling due within one year
Trade creditors 53.9 71.5 18.8 17.1
Amounts owed to subsidiary undertakings - - 39.3 42.3
Amounts owed to associated undertakings 0.3 0.2 - 0.2
Current corporation tax 15.2 19.0 7.6 7.2
Other taxes and social security costs 3.5 3.4 1.0 0.6
Other creditors 19.8 8.7 9.8 3.9
Accruals and deferred income 38.5 46.2 14.3 16.6
Obligations under finance leases - 0.4 - 0.4
Dividends 17.9 15.3 17.9 15.3
------ ------ ------ ------
Total other creditors falling due within one year 149.1 164.7 108.7 103.6
------ ------ ------ ------
------ ------ ------ ------
Other creditors falling due after more than one year 1.0 2.5 - -
------ ------ ------ ------
</TABLE>
20. Provisions for liabilities and charges
<TABLE>
<CAPTION>
20(a) Group
------------------------------------------------------------------------------------------------------------------------------------
Provisions
for loss
Rationalisation Retirement Other on business Deferred
provisions benefits provisions disposal taxation Total
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million million
<S> <C> <C> <C> <C> <C> <C>
At beginning of year as previously stated 6.8 19.2 14.0 9.0 5.5 54.5
Prior year adjustment - 2.9 - - - 2.9
------ ------ ------ ------ ------ ------
At beginning of year as restated 6.8 22.1 14.0 9.0 5.5 57.4
Exchange adjustments - (1.6) (0.4) - - (2.0)
Utilised (0.9) (1.5) (6.7) - - (9.1)
Charge for year 0.7 2.7 0.4 - 7.0 10.8
Transferred to
Cookson Matthey Ceramics plc (5.7) (0.7) (1.0) - (1.8) (9.2)
Business disposal - (2.7) - (9.0) - (11.7)
Other movements - - 0.2 - 1.2 1.4
------ ------ ------- ------ ------ ------
Total at end of year 0.9 18.3 6.5 - 11.9 37.6
------ ------ ------- ------ ------ ------
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
<TABLE>
<CAPTION>
20(B)Parent company
-----------------------------------------------------------------------------------------------------------------------------
Rationalisation Retirement Other Deferred
provisions benefits provisions taxation Total
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million
<S> <C> <C> <C> <C> <C>
At beginning of year as previously stated 0.3 - 5.4 3.4 9.1
Prior year adjustment - 2.5 - - 2.5
---- ---- ---- ---- ----
At beginning of year as restated 0.3 2.5 5.4 3.4 11.6
Utilised - (0.1) (2.6) - (2.7)
Charge for year - 0.3 (0.1) 0.3 0.5
Transferred to
Cookson Matthey Ceramics plc - (0.2) - - (0.2)
---- ---- ---- ---- ----
Total at end of year 0.3 2.5 2.7 3.7 9.3
---- ---- ---- ---- ----
</TABLE>
[CAPTION]
<TABLE>
21. Deferred taxation Group Parent company
-------------------------------------------------------------------------------------------------------------------------------
Full potential Full potential
Provision liability Provision liability
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
<S> <C> <C> <C> <C>
Timing differences on fixed assets 12.6 15.8 3.7 3.7
Timing differences on stock 0.1 0.1 - -
Deferred capital gains - 1.1 - 1.1
Advance corporation tax not utilised - (33.6) - (33.6)
Other timing differences (0.8) (0.8) - -
----- ----- --- -----
11.9 (17.4) 3.7 (28.8)
----- ----- --- -----
</TABLE>
No account has been taken of taxation which would be payable if the retained
profits of overseas subsidiary and associated undertakings were distributed.
[CAPTION]
<TABLE>
22. Called up share capital 1995 1994
--------------------------------------------------------------------------------------------------------------------------------
Allotted issued Allotted issued
Athorised fully paid Authorised fully paid
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
<S> <C> <C> <C> <C>
3.5% Cumulative preference shares of (pound)1 each 0.4 0.3 0.4 0.3
8% Convertible cumulative preference shasres (pound)
1 each - - 0.3 0.3
Ordinary shares (pound)1 each 220.0 191.9 219.7 190.9
------- ------- ------- -------
Total called up share capital 220.4 192.1 220.4 191.5
------- ------- ------- -------
</TABLE>
The number of ordinary shares in issue at 31st March 1995 was 191,756,634 (1994
190,894,729) an the number of 8% convertible cumulative preference shares in
issue at 31st March 1995 was nil (1994 276,250). On 14th October 1994, in
accordance with its Articles of Association, the company exercised its right of
conversion over the remaining 8% convertible cumulative preference shares.
Including the above, during the year ended 31st March 1995 holers of 276,250
(1994 16,885) 8% convertible cumulative preference shares (each convertible into
1.78 ordinary shares) converted their shares into fully paid ordinary shares. As
a consequence, (pound)215,475 (1994 (pound)13,170) of the share premium account
was applied in paying up the ordinary shares at par.
During the year ended 31st March 1995, senior executives exercise their options
to subscribe for a total of 370,180 ordinary shares at prices from 280.88 pence
per share to 455 pence per share.
<PAGE>
Notes on the Accounts
for the year ended 31st march 1995
22. Called up share capital continued
------------------------------------------------------------------------------
Since 31st March 1995 two executives have exercised options to subscribe for
16,757 ordinary shares. As a consequence, a further (Pounds)23,389 of the share
premium account has been applied in paying up the ordinary shares at par.
Therefore, as at 31st May 1995 after completing these allotments there were
191,773,391 ordinary shares in issue.
Certain directors and senior executives have options under the Executive Share
Option Scheme and the US Executive Stock Option Plan giving them the right to
subscibe for a total as at 31st May 1995 of 2,137,170 ordinary shares,
exercisable at various times up to the year 2004 at prices from 186.59 pence
per share to 550 pence per share.
With the execption of 3.5% cumulative preference shares, the company has no
non-equity share capital.
23. Reserves
23(A) Group
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Share Associated Profit
premium Revaluation undertakings' & loss
account reserve reserves account
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
<S> <C> <C> <C> <C>
At beginning of year as previously
stated 2.9 45.3 0.1 131.8
Prior year adjustment -- -- -- (2.9)
----- ------ ---- -----
At beginning of year as restated 2.9 45.3 0.1 128.9
----- ------ ---- -----
Exchange adjustments -- (0.8) (0.6) (0.6)
Conversion of 8% cumulative prefer-
ence shares (0.2) -- -- --
Premium on shares issued 0.9 -- -- --
Retained profit for the period -- -- (0.6) 38.6
Revaluations of fixed assets -- (18.8) -- --
Goodwill written off in respect of
acquisitions and joint ventures -- -- -- (3.8)
Goodwill written off on formation of
Cookson Matthey Ceramics plc -- -- -- (3.2)
Transfer on formation of Cookson
Matthey Ceramics plc -- (5.6) -- 5.6
Transfer and other movements -- (3.1) -- 3.1
----- ------ ---- -----
Reserves at end of year 3.6 17.0 (1.1) 168.6
----- ------ ---- -----
</TABLE>
The cumulative amount of goodwill charged against profit and loss account at
31st March 1995, net of goodwill relating to disposals, was (Pounds)57.5 million
(1994 (Pounds)50.5 million).
Currency translation differences include a (Pounds)1.6 million exchange loss on
foreign currency borrowings used to hedge overseas net assets.
23(B) Parent company
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Share Profit
premium Revaluation & loss
account reserve account
(Pounds) (Pounds) (Pounds)
million million million
<S> <C> <C> <C>
At beginning of year as previously stated 2.9 26.9 210.8
Prior year adjustment -- -- (2.5)
---- ----- -----
At beginning of year as restated 2.9 26.9 208.3
Conversion of 8% cumulative preference shares (0.2) -- --
Premium of shares issued 0.9 -- --
Retained profit for the period -- -- 50.3
Revaluations of fixed assets -- (20.8) --
Transfers and other movements -- (0.1) 0.1
---- ----- -----
Reserves at end of year 3.6 6.0 258.7
---- ----- -----
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
<TABLE>
<CAPTION>
Group Parent Company
1995 1994 1995 1994
24. Commitments, guarantees and (Pounds) (Pounds) (Pounds) (Pounds)
contingent liabilities million million million million
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Future capital expenditure
Contracted 1.5 2.0 0.3 0.9
Authorised but not contracted 4.4 7.6 3.2 5.8
Annual commitments under operating leases
Leases of land and buildings terminating
Within one year 0.2 0.7 -- --
In one to five years 2.1 1.7 -- --
Over five years 3.0 3.1 2.4 2.4
Other leases terminating
Within one year 0.6 0.7 0.3 0.5
In one to five years 1.2 1.8 0.5 1.1
</TABLE>
Guarantees
Bank overdrafts, loans, metal accounts and other obligations of certain
subsidiary and associated undertakings due to third parties amounting to
(Pounds)31.3 million (1994 (Pounds)22.9 million) are guaranteed by the parent
company and certain subsidiary undertakings.
Contingent liabilities
In August 1993, General Motors Corporation (GM) issued proceedings against
Johnson Matthey in the United States alleging breach of contract and various
other matters. Johnson Matthey vigorously rejects all GM's allegations which it
does not believe have any substance and has filed several counterclaims. The
directors are of the opinion, relying on legal advice, that GM's allegations
will not prevail.
<TABLE>
<CAPTION>
25. Notes to the cash flow statement 1995 1994
25(A) Reconciliation of operating profit to net cash as
inflow from operating activities restated
(Pounds) (Pounds)
million million
------------------------------------------------------------------------
<S> <C> <C>
Operating profit 100.4 81.6
Depreciation charges 27.8 30.7
Loss on sale of tangible fixed assets 0.4 0.2
Shares of operating profits of associated undertakings (13.6) (2.0)
Increase in stocks (36.4) (7.1)
Increase in debtors (36.8) (26.4)
Increase in creditors and provisions 15.5 2.2
Increase/(decrease) in precious metal leases 2.6 (7.6)
----- -----
Net cash inflow from continuing operating activities 59.9 71.6
Net cash outflow in respect of rationalisation costs (0.6) (4.6)
----- -----
Net cash inflow from operating activities 59.3 67.0
----- -----
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st march 1995
<TABLE>
<CAPTION>
Cash at
bank
and in Bank
hand overdraft Total
25(b) Analysis of changes in cash and cash (Pounds) (Pounds) (Pounds)
equivalents million million million
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at 31st March 1993 31.4 (7.6) 23.8
Net cash inflow/(outflow) before adjustments
for the effect of foreign exchange rate
changes 5.9 (13.7) (7.8)
Effect of foreign exchange rate changes 0.1 (0.3) (0.2)
---- ----- -----
Balance at 31st March 1994 37.4 (21.6) 15.8
Net cash inflow/(outflow) before adjustments
for the effect of foreign exchange rate
changes 2.1 (27.3) (25.2)
Effect of foreign exchange rate changes (0.2) 0.6 0.4
---- ----- -----
Balance at 31st March 1995 39.3 (48.3) (9.0)
---- ----- -----
<CAPTION>
Finance
Share Share lease
captial premium borrowings obligations
(Pounds) (Pounds) (Pounds) (Pounds)
25(c) Analysis of changes in financing million million million million
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at 31st March 1993 185.8 4.5 114.4 1.0
Cash inflows on new issues 1.5 2.6 -- --
Scrip issue in lieu of dividend 4.2 (4.2) -- --
Reduction in borrowings and lease obli-
gations -- -- (23.2) (0.6)
Effect of foreign exchanges rate changes -- -- 0.6 --
----- ---- ----- -----
Balance at 31st March 1994 191.5 2.9 91.8 0.4
Cash inflows on new issues 0.4 0.9 -- --
Conversion of 8% preference shares 0.2 (0.2) -- --
Incease/(reduction) in borrowings and
lease obligations -- -- 1.9 (0.4)
Effect of foreign exchange rates changes -- -- (0.3) --
----- ---- ----- -----
Balance at 31st March 1995 192.1 3.6 93.4 --
----- ---- ----- -----
<CAPTION>
1995 1994
25(D) Analysis of cash effect of acquisitions and (Pounds) (Pounds)
disposals million million
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment in subsidiary undertakings
Climax Performance Materials Microelectronics Group
(see note 26) 1.3 --
Ryoka Matthey Corporation (see note 26) 9.7 --
The Alta Group Inc ("earn-out" payment) 0.2 --
Svenska Emissionsteknik AB -- 1.0
PT Johnson Matthey Indonesia -- 0.1
----- -----
Net cash outflow 11.2 1.1
----- -----
Investment in associated undertakings
Cookson Matthey Ceramics plc (see note 27) 4.7 --
Johnson Matthey HICOM Sdn Bhd (see note 26) 1.0 --
----- -----
Net cash outflow 5.7 --
----- -----
Sale of businesses
Metalli Preziosi SpA (see note 26) 19.0 --
UK and Irish Jewellery business -- 35.3
----- -----
Net cash inflow 19.0 35.3
----- -----
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
26. Acquisitions, joint ventures and disposals
--------------------------------------------------------------------------------
Climax Performance Materials Microelectronics Group
On 2nd February 1995 the group acquired the Climax Performance Materials
Microelectronics Group. This has been accounted for by acquisition accounting.
<TABLE>
<CAPTION>
Book values Fair values
immediately Fair value at time of
prior to acquisition adjustments acquisition
(Pounds) (Pounds) (Pounds)
million million million
<S> <C> <C> <C>
Tangible fixed assets 0.4 - 0.4
Stock 0.5 (0.1) 0.4
Debtors and prepayments 0.1 -- 0.1
Creditors -- -- --
--- ---- ---
Total 1.0 (0.1) 0.9
--- ----
Costs incurred 0.1
Purchase consideration 1.2
---
Goodwill on acquisition 0.4
---
Cash effect of acquisition
</TABLE>
<TABLE>
<S> <C>
(Pounds)
million
Purchase consideration 1.2
Costs incurred 0.1
--------
1.3
--------
</TABLE>
Ryoka Matthey Corporation
During the year the group formed a joint venture, Ryoka Matthey Corporation,
which combines Johnson Matthey's sputtering target operations in Japan with
those of Mitsubishi Chemical Corporation. This has been accounted for by
acquisition accounting as a 50% owned subsidiary.
<TABLE>
<CAPTION>
Fair
values
at time of
formation
(Pounds)
million
<S> <C>
Tangible fixed assets 2.6
Stock 1.5
Debtors and prepayments 3.0
Creditors (2.5)
Borrowings (9.7)
Minority interests 2.2
----
(2.9)
Consideration --
----
Goodwill arising on formation 2.9
----
</TABLE>
<TABLE>
<S> <C>
(Pounds)
million
Cash effect of formation
Borrowings 9.7
-----
</TABLE>
JOHNSON MATTHEY HICOM Sdn Bhd
On 17th June 1994 the group announced the signing of a joing venture agreement
to build an autocatalyst plant in Malaysia. During the year the group invested
(Pounds) 1.0 million in the joint venture company, Johnson Matthey HICOM Sdn
Bhd. The investment is being accounted for an an associated undertaking.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1995
26. Acquisitions, joint ventures and disposals continued
Svenska Emissionsteknik AB
During the year the group purchased additional shares in Svenska Emissionsteknik
AB for (Pounds) 0.5 million, which was accrued at the year end, increasing the
group's percentage holding of ordinary share capital from 83% to 100%.
Metalli Preziosi SpA
On 9th June 1994 the group announced the sale of its interest in Metalli
Preziosi SpA. The net assets sold and the consideration were as follows:
<TABLE>
<CAPTION> (Pounds) million (Pounds) million
<C> <C>
Sale proceeds
Assets disposed of:
Tangible fixed assets 5.9
Stock 16.5
Debtors and prepayments 10.7
Borrowings (19.4)
Creditors and provisions (5.1)
-------
Net assets disposed of 8.6
-------
Loss on sale (8.6)
Expenses of sale (0.4)
-------
Net loss on sale (9.0)
Less 1994 provision 9.0
-------
-
-------
Cash effect if disposal
Decrease in borrowings 19.4
Less costs incurred (0.4)
-------
19.0
-------
27. Formation of Cookson Matthey Ceramics plc
The formation was accounted for as follows:
(Pounds) million
Assets contributed:
Tangible fixed assets 40.5
Stocks 25.6
Debtors 34.7
Creditors and provisions (31.9)
Cash balances 2.8
-------
71.7
Formation costs 1.9
-------
73.6
50% share of Cookson Matthey Ceramics plc (70.4)
-------
Goodwill on formation 3.2
-------
Cash effect of formation
Cash balances transferred 2.8
Costs incurred 1.9
-------
4.7
</TABLE>
<PAGE>
Auditors' Report
to the members of Johnson Matthey Public Limited Company
We have audited the financial statements on pages 38 to 58.
Respective Responsibilities of Directors And Auditors
As described on page 36 the company's directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
Basis of Opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the group's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of affairs of the company and the group as at 31st March 1994 and of the profit
of the group for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
8th June 1994
London
KPMG Peat Marwick
Chartered Accountants
Registered Auditors
<PAGE>
Consolidated Profit and Loss Account
for the year ended 31st March 1994
<TABLE>
<CAPTION>
1994 1994 1993 1993
(Pounds) (Pounds) (Pounds) (Pounds)
NOTE million million million million
<S> <C> <C> <C> <C> <C>
Turnover 6
Continuing operations 1,844.3 1,761.4
Discontinued operations 1 110.7 92.3
-------- -------
1,955.0 1,853.7
Cost of materials sold (1,564.0) (1,520.0)
-------- --------
Net revenues
Continuing operations 372.3 310.5
Discontinued operations 1 18.7 23.2
------- ------
391.0 333.7
Other cost of sales (195.4) (155.7)
------- -------
Gross profit 195.6 178.0
Distribution costs (55.0) (47.6)
Administrative expenses (60.9) (61.1)
Share of profits of associated undertakings 2.0 2.3
-------- --------
Operating profit 6
Continuing operations 81.6 70.8
Discontinued operations 1 0.1 0.8
------- ------
81.7 71.6
Profit / (loss) on disposal of businesses 2 (6.7) 3.7
Provision for restructuring in joint venture 3 (5.0) -
-------- -------
Profit on ordinary activities before interest 70.0 75.3
Net interest 5 (4.6) (1.5)
--------- --------
Profit on ordinary activities before taxation 7 65.4 73.8
Taxation 8 (20.7) (23.7)
--------- ---------
Profit for the financial year 44.7 50.1
Dividends 10 (21.8) (19.1)
--------- --------
Retained profit for the year 22 22.9 31.0
--------- --------
pence pence
Earnings per ordinary share 9 23.7 27.1
Dividend per ordinary share 10 11.4 10.3
</TABLE>
The notes on pages 42 to 58 from an integral part of the accounts.
<PAGE>
Consolidated and Parent Company Balance Sheets
for the year ended 31st March 1994
<TABLE>
<CAPTION>
Group Parent Company
------------------ ------------------
1994 1993 1994 1993
(Pounds) (Pounds) (Pounds) (Pounds)
NOTE million million million million
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fixed assets
Tangible fixed assets 13 323.1 297.2 101.3 117.7
Investments 14 1.1 1.1 23.5 22.0
----- ----- ----- -----
324.2 298.3 124.8 139.7
----- ----- ----- -----
Current assets
Stocks 15 156.9 170.3 87.3 124.0
Debtors: due within one year 16 168.3 153.3 296.2 288.1
Debtors: due after one year 16 37.6 30.4 107.6 55.3
Short term investments 1.3 2.0 1.3 2.0
Cash at bank and in hand 37.4 31.4 9.5 1.3
----- ----- ----- -----
401.5 387.4 501.9 470.7
Creditors: Amounts falling due within one year
Borrowings 17 (69.8) (76.6) (40.0) (69.5)
Other creditors 18 (164.7) (159.3) (103.6) (91.1)
----- ----- ----- -----
Net current assets 167.0 151.5 358.3 310.1
----- ----- ----- -----
Total assets less current liabilities 491.2 449.8 483.1 449.8
Creitors: Amounts falling due after more than one year
Borrowings 17 (61.2) (70.4) (41.9) (55.9)
Other creditors 18 (3.9) (3.6) - -
Provisions for liabilities and charges 19 (54.5) (43.2) (9.1) (10.8)
----- ----- ----- -----
Net assets 371.6 332.6 432.1 383.1
----- ----- ----- -----
Capital and reserves
Called up share capital 21 191.5 185.8 191.5 185.8
Share premium account 22 2.9 4.5 2.9 4.5
Revaluation reserve 22 45.3 49.4 26.9 31.3
Associate undertakings' reserves 22 0.1 0.1 - -
Profit and loss account 22 131.8 92.8 210.8 161.5
----- ----- ----- -----
Shareholers' funds 371.6 332.6 432.1 383.1
----- ----- ----- -----
</TABLE>
The accounts were approved by the Board of Directors on 7th June 1994 and signed
on its behalf by:
DJ Davies
Directors
JN Sheldrick
The notes on pages 42 to 58 form an integral part of the accounts.
<PAGE>
Consolidated Cash Flow Statement
for the year ended 31st March 1994
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
NOTE million million
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net cash inflow from operating activities 24 74.3 46.3
Returns on investments and servicing of finance
Interest received 5.2 10.2
Interest paid (9.5) (11.4)
Interest element of finance lease rental payments (0.1) (0.3)
Dividends received from associated undertakings 1.0 0.8
Dividends paid (7.1) (18.2)
----- -----
Net cash (outflow) from returns on investments and
servicing of finance (10.5) (18.9)
Taxation
UK corporation tax paid including advance corporation tax (1.1) (5.9)
Overseas tax paid (16.9) (13.5)
----- -----
Tax paid (18.0) (19.4)
Investing activities
Purchase of tangible fixed assets (65.4) (54.9)
Purchase of subsidiary undertakings (net of cash and cash
equivalents acquired) 25 (1.1) (9.6)
Sale of business 25 35.3 -
Sale of tangible fixed assets 4.2 1.4
Sale of shares in associated undertaking - 9.5
Sale/(purchase) of short term investment (0.7) (0.9)
----- -----
Net cash (outflow) from investing activities (26.3) (54.5)
----- -----
Net cash inflow/(outflow) before financing (19.5) (46.5)
----- -----
Financing 24
Issue of ordinary share capital (4.1) (1.8)
Reduction in money borrowings 23.2 3.9
Decrease in metal borrowings 7.6 5.4
Capital element of finance lease rental payments 0.6 2.5
----- -----
Net cash (inflow)/outflow from financing 27.3 10.0
Decrease in cash and cash equivalents 24 (7.8) (56.5)
----- -----
(19.5) (46.5)
----- -----
</TABLE>
The notes on pages 42 to 58 form an integral part of the accounts.
<PAGE>
Total Recognised Gains and Losses
for the year ended 31st March 1994
<TABLE>
<CAPTION>
1994 1993
(Pounds) million (Pounds) million
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial year 44.7 50.1
Unrealised deficit on revaluations - (2.7)
------ -----
44.7 47.4
Currency translation differences on foreign currency net investments 0.4 0.4
------ -----
Total recognised gains and losses for the year 45.1 47.8
------ -----
<CAPTION>
Note of Historical Cost Profits and Losses
for the year ended 31st March 1994
1994 1993
(Pounds) million (Pounds) million
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reported profit on ordinary activities before taxation 65.4 73.8
Realisation of revaluation gains of previous years 2.9 3.8
Difference between historical cost depreciation and actual 0.3 0.3
------ -----
Historical cost profit before taxation 68.6 77.9
------ -----
Historical cost retained profit 26.1 35.1
<CAPTION>
Movement in Shareholders' Funds
for the year ended 31st March 1994
1994 1993
(Pounds) million (Pounds) million
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial year 44.7 50.1
Dividends (21.8) (19.1)
Cash alternative value of enhanced scrip dividend for 1993 12.6
------ -----
35.5 31.0
Other recognised gains and losses relating to the year 0.4 (2.3)
New share capital subscribed 4.1 1.8
Goodwill charged on business disposals 0.1 -
Goodwill written off on purchase of minority's shares (1.1) (8.4)
------ -----
Net addition to shareholders' funds 39.0 22.1
Opening shareholders' funds 332.6 310.5
------ -----
Closing shareholders' funds 371.6 332.6
------ -----
</TABLE>
The notes on pages 42 to 58 form an integral part of the accounts.
<PAGE>
Accounting Policies
for the year ended 31st March 1994
1. Accounting Convention
The accounts are prepared in accordance with applicable accounting standards
under the historical cost convention as modified by the revaluation of certain
land and buildings.
2. Basis of consolidation
The consolidated accounts comprise the accounts of the parent company and all
its subsidiary undertakings and include the group's interest in associated
undertakings.
The results of companies acquired or disposed of in the year are dealt with from
or up to the effective date of acquisition or disposal respectively. The net
assets of companies acquired are incorporated in the consolidated accounts at
their fair values to the group at the date of acquisition. Goodwill arising on
acquisitions is taken to reserves.
The Parent Company has not presented its own profit and loss account as
permitted by Section 230 of the Companies Act 1985.
3. Foreign currencies
Profit and loss accounts in foreign currencies and cash flows included in the
cash flow statement are translated into sterling at average exchange rates for
the year. Foreign currency assets and liabilities are translated into sterling
at the rates of exchange at the balance sheet date. Gains or losses arising on
the translation of the net assets of overseas subsidiaries and associated
undertakings are taken to reserves, less exchange differences arising on related
foreign currency borrowings. Other exchange differences are taken to the profit
and loss account.
4. Stocks
(i) Precious metal stocks: Stocks of gold, silver and platinum group metals
are valued according to the source from which the metal is obtained. Metal which
has been purchased and committed to future sales to customers or hedged in metal
markets is valued at the price at which it is contractually committed or hedged,
adjusted for unexpired contango. Borrowed metal is valued at market prices at
the balance sheet date.
Other precious metal stocks owned by the group, which are unhedged, are valued
at the lower of cost and net realisable value. Because of the volatility of
precious metal prices, net realisable value is generally taken to be the lower
of market prices and average prices ruling over the last five years.
(ii) Other stocks: These are valued at the lower of cost, including
attributable overheads, and net realisable value.
5. Research and development
Research and development expenditure is charged against profits in the year it
is incurred.
6. Forward contracts
Commitments arising from forward contracts entered into in the ordinary course
of business are not included in the balance sheet.
7. Tangible fixed assets
(i) depreciation: Freehold land and certain office buildings are not
depreciated. The group's policy is to maintain these properties in such
condition that their value does not diminish and the cost of maintenance is
charged to operating profit.
Other fixed assets are depreciated on a straight line basis at annual rates
which vary according to the class of asset, but are typically:
Leasehold property (or at higher rates
based on the life of the lease) 2%
Freehold buildings 3.33%
Plant and equipment 10%-33%
(ii) Leases: The cost of assets held under finance leases is included under
tangible fixed assets and the capital element of future lease payments is
included in creditors. Depreciation is provided in accordance with the group's
accounting policy for the class of asset concerned. Lease payments are treated
as consisting of capital and interest elements and the interest elements and the
interest is charged to the profit and loss account using the annuity method.
Rentals under operating leases are expensed as incurred.
(iii) Grants in respect of capital expenditure. Grants received in respect of
capital expenditure are included in creditors and released to the profit and
loss account in equal instalments over the expected useful lives of the related
assets.
8. Deferred taxation Deferred taxation is provided using the liability method on
all timing differences to the extent that they are expected to reverse in the
foreseeable future.
9. Pensions and other retirement benefits The group operates a number of
contributory and non-contributory schemes, mainly of the defined benefit type,
which require contributions to be made to separately administered funds. The
cost of these schemes is charged to profit and loss account over the service
lives of employees in accordance with the advice of the schemes' independent
actuaries. Variations from the regular cost are spread over the average expected
remaining service lives of current employees.
Post-retirement health care benefits in the US are accounted for under FAS 106.
In accordance with this standard, the cost of post-retirement health care
benefits is charged to profit and loss account on a systematic basis over the
expected service lives of employees. The actuarial liability for the cost of the
benefits has been fully provided for in the balance sheet.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
1994 1993
(Pounds) million (Pounds) million
1. Discontinued operations
During the year the group sold its UK and Irish Jewellery business to Cookson Group plc and in early June 1994 the group agreed to
dispose of its interest in Metalli Preziosi SpA. The contribution of these businesses to the profit and loss account was as follows:
<S> <C> <C>
Turnover 110.7 92.3
Cost of materials sold (92.0) (69.1)
----- -----
Net revenues 18.7 23.2
Other cost of sales (10.3) (12.5)
----- -----
Gross profit 8.4 10.7
Distribution costs (3.8) (4.8)
Administration expenses (4.5) (5.1)
----- -----
Operating profit 0.1 0.8
Metal interest (0.2) (0.3)
----- -----
Profit after metal interest (0.1) 0.5
----- -----
Discontinued turnover comprises:
UK and Irish Jewellery 39.4 40.9
Metalli Preziosi SpA 71.3 51.4
----- -----
Total 110.7 92.3
----- -----
Discontinued operating profit comprises:
UK and Irish Jewellery 1.1 0.8
Metalli Preziosi SpA (1.0) -
----- -----
Total 0.1 0.8
----- -----
</TABLE>
<TABLE>
<CAPTION>
1994 1993
(Pounds) million (Pounds) million
2. Profit/(loss) on disposal of businesses
<S> <C> <C>
Profit on disposal of UK and Irish
Jewellery business 2.3 -
Provision for loss on sale of
Metalli Preziosi SpA (9.0) -
Profit on sale of investment in Tanaka
Matthey KK (Japan) - 3.7
----- -----
(6.7) 3.7
----- -----
</TABLE>
Sales of fixed assets resulted in a loss of (Pounds) 0.2 million (1993
(pound) 0.2 million profit). Gross profits and losses were not sufficiently
material to warrant separate disclosure on the face of the profit and loss
account.
3. Provision for restructuring in joint venture
On 17th March 1994, the Company announced the formation of a joint venture,
Cookson Matthey Ceramics plc, which combines Johnson Matthey's Colour and Print
Division with Cookson Group plc's Ceramics Supplies and Minerals business.
Cookson Matthey Ceramics plc is expected to commence operations on 1st July 1994
following receipt of certain regulatory clearances. Johnson Matthey's share of
the joint venture's restructuring provision has been charged to the profit and
loss account.
4. UK Refining
Materials Technology Division's results for the year to March 1994 include
turnover of (Pounds) 23.2 million and operating profit of (Pounds) 2.5 million
from the UK Refining business whose rationalisation was completed in March 1993.
In previous periods the losses of this business were charged to provisions.
<TABLE>
<CAPTION>
1994 1993
(Pounds) million (Pounds) million
5. Net interest
<S> <C> <C>
On loans repayable after more than five years (1.1) (1.0)
On loans wholly repayable within five years (8.4) (10.4)
On finance leases (all wholly repayable by instalments within five years) (0.1) (0.3)
----- -----
(9.6) (11.7)
Interest receivable 5.0 10.2
----- -----
Net interest (4.6) (1.5)
----- -----
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
6. Segmental information
Activity analysis 1994
-------------------------------------------------------------------------------------
Catalytic Materials Precious Colour Total
Systems Technology/4/ Metals & Print Corporate Group
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million million
<S> <C> <C> <C> <C> <C> <C>
Turnover/1/
Total sales 296.0 587.0 1,325.1 110.2 -- 2,318.3
Inter-segment sales (12.0) (22.2) (328.5) (0.6) -- (363.3)
----- ----- ------- ----- ---- -------
Sales to third parties 284.0 564.8 996.6 109.6 -- 1,955.0
----- ----- ------- ----- ---- -------
Profit before taxation
Operating profit/2/ 28.2 28.0 20.8 13.0 (8.3) 81.7
Metal interest/3/ (0.5) (2.1) 2.1 -- -- (0.5)
----- ----- ------- ----- ---- -------
Profit after metal
interest 27.2 25.9 22.9 13.0 (8.3) 81.2
----- ----- ------- ----- ---- -------
Loss on disposal of businesses (6.7)
Provision for restructuring in joint venture (5.0)
Money interest (4.1)
-------
Profit on ordinary activities before taxation 65.4
-------
Segment net assets ex-
cluding borrowed metal 115.5 175.9 79.0 71.5 5.8 447.7
----- ----- ------- ----- ---- -------
Net financial borrowings (76.1)
-------
Net assets (shareholders' funds) 371.6
-------
<CAPTION>
Activity analysis 1993
-------------------------------------------------------------------------------------
Catalytic Materials Precious Colour Total
Systems Technology/4/ Metals & Print Corporate Group
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million million
<S> <C> <C> <C> <C> <C> <C>
Turnover/1/
Total sales 267.4 528.4 1,365.3 103.3 -- 2,264.4
Inter-segment sales (11.0) (53.6) (345.6) (0.5) -- (410.7)
----- ----- ------- ----- ---- -------
Sales to third parties 256.4 474.8 1,019.7 102.8 -- 1,853.7
----- ----- ------- ----- ---- -------
Profit before taxation
Operating profit/2/ 27.1 20.8 20.5 11.3 (8.1) 71.6
Metal interest/3/ (0.8) (3.7) 2.5 -- 0.7 (1.3)
----- ----- ------- ----- ---- -------
Profit after metal
interest 26.3 17.1 23.0 11.3 (7.4) 70.3
----- ----- ------- ----- ---- -------
Profit on disposal of businesses 3.7
Money interest (0.2)
-------
Profit on ordinary activities before taxation 73.8
-------
Segment net assets ex-
cluding borrowed metal 97.0 177.2 76.5 69.9 2.6 423.2
----- ----- ------- ----- ---- -------
Net financial borrowings (90.6)
-------
Net assets (shareholders' funds) 332.6
-------
</TABLE>
/1/Turnover comprises all invoiced sales of goods and services exclusive of
sales taxes.
/2/Operating profit, which is before exceptional items, is inclusive of the
group's share of profits of associated undertakings.
/3/Metal interest includes interest payable on metal leases less net contangos
receivable on forward contracts.
/4/Discontinued operations (note 1 on page 43) are included in the figures for
Materials Technology. The net assets excluding borrowed metal included are
(Pounds) 13.9 million (1993 (Pounds) 26.6 million).
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
Geographical analysis 1994
------------------------------------------------------------------------------
Africa,
North Asia & Middle East Total
Europe/1/ America Pacific & others Group
(Pounds (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million
<S> <C> <C> <C> <C> <C>
Turnover by destination/1/
Sales to third parties 783.7 703.3 427.5 40.5 1,955.0
------- ----- ----- ---- -------
Turnover by origin/1/
Total sales 1,271.6 667.1 268.0 16.4 2,223.1
Inter-segment sales (203.8) (63.1) (0.8) (0.4) (268.1)
------- ----- ----- ---- -------
Sales to third parties 1,067.8 604.0 267.2 16.0 1,955.0
------- ----- ----- ---- -------
Profit before taxation
Operating profit/2/ 29.0 45.1 5.9 1.7 81.7
Metal interest/1/ 0.2 (0.4) (0.2) (0.1) (0.5)
------- ----- ----- ---- -------
Profit after metal interest 29.2 44.7 5.7 1.6 81.2
------- ----- ----- ---- -------
Loss on disposal of businesses (6.7)
Provision for restructuring in
joint venture (5.0)
Money interest (4.1)
-------
Profit on ordinary activities 65.4
before taxation -------
Segment net assets excluding
borrowed metal 280.5 96.6 61.8 8.8 447.7
------- ----- ----- ----
Net financial borrowings (76.1)
-------
Net assets (shareholders' 371.6
funds) -------
<CAPTION>
Geographical analysis 1993
------------------------------------------------------------------------------
Africa,
North Asia & Middle East Total
Europe/4/ America Pacific & others Group
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million
<S> <C> <C> <C> <C> <C>
Turnover by destination/1/
Sales to third parties 966.4 582.2 256.9 48.2 1,853.7
------- ----- ----- ---- -------
Turnover by origin/1/
Total sales 1,403.3 559.6 138.4 15.4 2,116.7
Inter-segment sales (190.7) (70.5) (1.3) (0.5) (263.0)
------- ----- ----- ---- -------
Sales to third parties 1,212.6 489.1 137.1 14.9 1,853.7
------- ----- ----- ---- -------
Profit before taxation
Operating profit/2/ 34.0 30.1 4.3 3.2 71.6
Metal interest/3/ 0.3 (1.3) (0.2) (0.1) (1.3)
------- ----- ----- ---- -------
Profit after metal interest 34.3 28.8 4.1 3.1 70.3
------- ----- ----- ---- -------
Profit on disposal of business (3.7)
Money interest (0.2)
-------
Profit on ordinary activities
before taxation 73.8
-------
Segment net assets excluding
borrowed metal 300.1 78.6 35.0 9.5 423.2
------- ----- ----- ----
Net financial borrowings (90.6)
-------
Net assets (shareholders' 332.6
funds) -------
</TABLE>
/1/ Turnover comprises all invoiced sales of goods and services exclusive of
sales taxes.
/2/ Operating profit, which is before exceptional items, is inclusive of the
group's share of profits of associated undertakings.
/3/ Metal interest includes interest payable on metal leases net contangos
receivable on forward contracts.
/4/ Turnover by market relating to the United Kingdom amounted to (Pounds)
472.7 million (1993 (Pounds) 587.4 million). Discontinued operations (note 1
on page 43) are included in the figures for Europe. The net assets excluding
borrowed metal included are (Pounds) 13.9 million (1993 (Pounds) 26.6 million).
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
7. Profit on ordinary activities before taxation million millioN
----------------------------------------------------------------------------
<S> <C> <C>
Profit on ordinary activities before taxation is arrived at
after charging/(crediting)
Research and development 28.5 25.0
less external funding received (3.7) (3.3)
---- ----
Net research and development 24.8 21.7
---- ----
Depreciation
-on owned assets 29.7 25.7
-on leased assets 1.0 0.8
Auditors' remuneration 0.9 0.8
Other fees paid to auditors-United Kingdom 0.3 0.1
-rest of world 0.1 0.1
Operating lease rentals
-on plant and machinery 3.2 3.4
-on other operating leases 2.4 2.5
Director's compensation for loss of office 0.3 -
Director's remuneration (see note 11(b) on page 48)
-fees 0.1 0.1
-other emoluments, including pension contributions 1.5 1.3
---- ----
1.6 1.4
---- ----
</TABLE>
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds) (Pounds) (Pounds)
8. Taxation million million million million
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United Kingdom
Corporation tax at 33% (1993 33%) 12.1 9.5
Double taxation relief (8.8) (7.5)
Net advance corporatoin tax (set off)/written (0.5) 4.0
off in year ---- ----
Current taxation for year 2.8 6.0
Deferred taxation for year (0.2) 2.8
---- ----
2.6 8.8
Overseas
Taxation on income for the year 16.1 13.1
Withholding tax deductions on overseas income 1.1 0.8
---- ----
Current taxation for year 17.2 13.9
Deferred taxation for year (0.1) (0.2)
---- ----
17.1 13.7
Associated undertakings
Current taxation for year 1.0 1.2
---- ----
Total taxation 20.7 23.7
---- ----
Taxation on exceptional items and scrip dividend
included above
On sale of investment in Tanaka Matthey KK (Japan) -- 1.3
On provision for restructuring in joint venture (0.6) --
ACT saved on enhanced scrip dividend (3.7) --
---- ----
(4.3) 1.3
---- ----
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
9. Earnings per ordinary share
Profit or the financial year, less preference dividends, is (pound) 44.7 million
(1993 (pound) 50.1 million). This is divided by the weighted average number of
shares in issue calculated as 188,744,436 (1993 184,877,623) to give basic
earnings per ordinary share of 23.7 pence (1993 27.1 pence). The effect on
earnings per share of conversion of the remaining 8% convertible preference
shares and the exercise of outstanding share options would not be material.
<TABLE>
<CAPTION>
1994 1993
(Pounds) (Pounds)
million million
<C> <C>
10. Dividends
<S>
3.5% Cumulative preference dividend paid (Pounds)10,500 (1993 (Pounds)10,500) - -
8% Convertible cumulative preference dividend paid (pound)22,606 (1993 (pound)24,614) - -
Interim ordinary dividend - 3.4 pence per share (1993 3.2 pence per share) 6.5 5.9
Final ordinary dividend - 8.0 pence per share (1993 7.1 pence per share) 15.3 13.2
------ ------
Total dividends 21.8 19.1
------ ------
</TABLE>
The final ordinary dividend has been provided on the basis that all 8%
preference shares will be converted. The final dividend for 1993 was satisfied
by cash payments of (Pounds)0.5 million and by the issue of 4,173,176 shares
under the enhanced scrip alternative approved by shareholders at the company's
Annual General Meeting on 13th July 1993.
11. Directors
11(A) Directors' interests
The interests of the directors in shares of the company, according to the
register required to be kept by Section 325 (1) of the Companies Act 1985, were:
<TABLE>
<CAPTION>
31st March 1994 31st March 1993
Ordinary Ordinary
Ordinary share Ordinary share
shares options shares options
<S> <C> <C> <C> <C>
D J Davies 18,828 - 15,502 -
R K A Wakeling* 25,476 104,995 12,220 264,355
The Hon. G H Wilson 511 - 500 -
P C D Burnell 511 - - -
C R N Clark 9,762 77,103 10,749 129,465
H E Fitzgibbons 1,000 - 1,000 -
H M P Miles OBE 500 - 500 -
P F Retief 500 - - -
J N Sheldrick 30,383 73,411 5,706 119,450
J A Stevenson 11,230 - 10,973 -
I G Thorburn 21,686 103,468 24,685 98,230
D G Titcombe 23,996 66,573 13,706 133,235
</TABLE>
Directors' interests at 1st June 1994 were unchanged from those listed above
with the following exceptions : the trustee of the UK Employee Share
Participation Scheme and the Johnson Matthey PEP Manager have purchased on
behalf of Messrs D J Davies, C R N Clark, J N Sheldrick. I G Thorburn and D G
Titcombe a further 439, 400, 382, 354, and 400 ordinary shares respectively; on
5th April 1994, C R N Clark exercised options over and disposed of 8,665
ordinary shares; between 6th and 7th April 1994 3,535 ordinary shares in which I
G Thorburn had an interest were sold.
In addition to the above, D J Davies held stock appreciation rights in relation
to 326,986 shares under a share-price related cash bonus scheme whose terms are
similar to those of the share option scheme.
The options and the stock appreciation rights are generally exercisable at
various times up to 2003 at prices between 280.88 pence and 455 pence per share.
No director had an interest in the mortgage debenture stock, the 8% convertible
cummulative preference shares or the 3.5% cummulative preference shares at 1st
April 1993 or 31st March 1994.
*Mr R K A Wakeling resigned from the Board on 31st March 1994.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
11(B) Directors' emolumnets 1994 1993
----------------------------------------------------------------------
<S> <C> <C>
Chairman-emuluments (Pounds)224,694(Pounds)200,446
-performance-related bonus (prior year) (Pounds)74,424 (pounds)42,534
-------------- --------------
(Pounds)299,118(Pounds)242,980
-------------- --------------
Highest paid director-emoluments (Pounds)235,714(Pounds)224,831
-performance-related bonus (prior year) (Pounds)80,493 (Pounds)47,260
-performance-related bonus (re 1993/94) (Pounds)55,000 --
-------------- --------------
(Pounds)371,207(Pounds)272,091
-------------- --------------
</TABLE>
The emoluments of the directors including the chairman and highest paid
director, excluding pension contributions, fell within the following bands:
<TABLE>
<CAPTION>
1994 1993
(Pounds) Number Number
<S> <C> <C>
370,001-375,000 1
295,001-300,000 1
270,001-275,000 1
240,001-245,000 1
205,001-210,000 1
200,001-205,000 1
</TABLE>
<TABLE>
<CAPTION>
1994 1993
(Pounds) Number Number
<S> <C> <C>
185,001-190,000 1
180,001-185,000 1
175,001-180,000 1
165,001-170,000 1
160,001-165,000 1
</TABLE>
<TABLE>
<CAPTION>
1994 1993
(Pounds) Number Number
<S> <C> <C>
155,001-160,000 1
90,001- 95,000 1
15,001- 20,000 4 5
10,001- 15,000 2
0- 5,000 1
</TABLE>
Directors' emoluments include performance-related bonuses which are determined
by the Management Development and Remuneration Committee for the achievement of
budgeted profit targets and personal objectives. These are nomally paid and
disclosed in the year following the one in which they are earned. On this basis
directors' emoluments were (Pounds)1,494,000 (1993 (Pounds)1,352,000) including
bonuses of (Pounds)342,500 (1993 (Pounds)234,000). In addition, Mr R K A
Wakeling received the (Pounds)55,000 bonus due to him in respect of 1993/94.
Neither the Chairman nor the non-executive directors have any pension
entitlement from the company, with the exception of Mr J A Stevenson who is a
pensioner of the UK scheme. The remaining directors are members of the
company's UK pension scheme. The cost to the company of benefits provided by
the scheme to all members averages 19% of basic salary although the company
currently is not required to make any contributions.
12. Employee information
<TABLE>
<CAPTION>
12(A) Employee numbers 1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
The average weekly number of employees during the year was as
follows:
Catalytic Systems 1,010 936
Material Technology 2,807 2,887
Precious Metals 625 561
Colour and Print 1,572 1,563
Research and Corporate 273 276
----- -----
Average number of employees 6,287 6,223
----- -----
Number of employees at 31st March 6,101 6,142
----- -----
The number of temporary employees at 31st March 1994 was 275 (1993 190).
<CAPTION>
1994 1993
(Pounds) (Pounds)
12(B) Employees costs million million
------------------------------------------------------------------------------
<S> <C> <C>
Wages and salaries 136.0 123.9
Social security costs 17.6 16.2
Other pension costs (3.8) (3.5)
----- -----
Total employee costs 149.8 136.6
----- -----
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
12(C) Retirement benefits
(i) United Kingdom pension scheme
The group's UK pension scheme is of the defined benefit type which requires
contributions to be made to a separately administered fund. At 1st April 1991,
the date of the latest actuarial valuation, the market value of the main UK
scheme's assets was (Pounds) 277.4 million, the actuarial value of which
represented 141% of the liability for benefits that had accrued to that date
making full allowance for future salary and pension increases and after taking
into account benefit changes introduced as of 1st April 1991. This represents an
actuarial surplus of (Pounds) 96.1 million which, following actuarial
recommendations, has permitted the company to suspend contributions for the
foreseeable future. A surplus cannot be refunded to the company except by
dissolution of the scheme in accordance with the rules of the scheme and
relevant legislation. The regular pension cost is asserted in accordance with
the advice of an independent qualified actuary using the projected unit method.
Rates used at the last actuarial valuation at 1st April 1991 were as follows:
[CAPTION]
<TABLE>
per annum
<S> <C>
Long term rate of investment return 9.0%
Dividend increase rate 4.5%
General salary and wage inflation rate 7.0%
Pension increase rate 5.0%
</TABLE>
In accordance with the applicable accounting standard, the surplus on the
group's UK pension fund has been spread over the average of the expected
remaining service lives of current employees (12 years) as a variation from
regular cost.
(ii) Foreign schemes
Pension costs relating to foreign schemes are charged in accordance with local
best practice using different accounting policies. The group's largest foreign
scheme is in the US which is of the defined benefit type which requires
contributions to be made to a separately administered fund. This scheme is
accounted for using the applicable US accounting standard. The cost of obtaining
actuarial valuations for the purpose of adjusting to the applicable UK
accounting standard is considered to be out of proportion to the benefits to be
gained.
(iii) Other retirement benefits
In the US the group provides post-retirement medical benefits to pensioners.
These costs are charged on an accruals basis similar to that used for pensions.
(iv) Profit and loss account and balance sheet impact of providing retirement
benefits
The effect of providing pensions and other retirement benefits on
operating profit was as follows:
[CAPTION]
<TABLE>
1994 1993
(Pounds) (Pounds)
million million
<S> <C> <C>
United Kingdom
Regular pension cost (6.5) (5.7)
Variation from regular cost 11.2 9.6
Interest on prepayment 2.5 1.7
----- ----
7.2 5.6
Overseas
Cost of foreign pension schemes (2.5) (2.1)
Cost of post-retirement medical benefits (0.9) (0.7)
----- -----
3.8 2.8
----- -----
</TABLE>
The following prepayments and provisions relating to pension schemes and other
post-retirement benefits are included in the group and parent company's balance
sheets:
[CAPTION]
<TABLE>
Group Parent Company
------------------ -----------------
1994 1993 1994 1993
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
<S> <C> <C> <C> <C>
Prepaid pension costs in the UK 36.6 28.7 36.6 28.7
Provision for foreign pensions 8.2 7.1 - -
Provision for post-retirement medical benefits 11.0 10.1 - -
</TABLE>
The prepaid pension costs as at 31st March 1994 include (Pounds) 0.8 million
arising on disposal of businesses.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
13. Fixed assets--tangible assets
13(a) Group
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Freehold
land & Short Long Plant &
Total buildings leasehold leasehold machinery
(Pounds) (Pounds) (Pounds) (Pounds (Pounds)
million million million million million
<S> <C> <C> <C> <C> <C>
Cost/valuation
At beginning of year 472.2 116.6 16.5 20.8 318.3
Purchases 65.4 19.9 0.7 -- 44.8
Busines disposals (10.7) (1.5) (0.2) (1.2) (7.8)
Disposals (22.2) (2.0) (3.1) -- (17.1)
Reclassifications -- 28.6 (0.3) (19.6) (8.7)
Exchange adjustments 1.5 0.5 (0.2) -- 1.2
------ ----- ---- ----- -----
At end of year 506.2 162.1 13.4 -- 330.7
------ ----- ---- ----- -----
Depreciation
At beginning of year 175.0 18.0 4.2 -- 152.8
Charge for the year 30.7 3.2 1.0 -- 26.5
Business disposals (5.0) (0.4) (0.1) -- (4.5)
Disposals (17.8) (0.9) (0.7) -- (16.2)
Reclassifications -- 0.2 (0.2) -- --
Exchange adjustments 0.2 -- -- -- 0.2
------ ----- ---- ----- -----
At end of year 183.1 20.1 4.2 -- 158.8
------ ----- ---- ----- -----
Net book value at 31st March
1994 323.10 142.0 9.2 -- 171.9
------ ----- ---- ----- -----
Net book value at 31st March
1993 297.2 98.6 12.3 20.8 165.5
------ ----- ---- ----- -----
Historical cost at 31st March
1994 472.8 128.9 13.2 -- 330.7
Accumulated historical
depreciation 191.7 28.8 4.1 -- 158.8
------ ----- ---- ----- -----
Net historical cost at 31st
March 1994 281.1 100.1 9.1 -- 171.9
------ ----- ---- ----- -----
</TABLE>
The net book value of fixed assets includes (Pounds)nil (1993 (Pounds)0.9
million) in respect of assets held under finance leases.
Freehold land and buildings of (Pounds)63.0 million included above are not
depreciated.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
13(b) Parent Company
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Freehold
land & Short Long Plant &
Total buildings leasehold leasehold Machinery
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million
<S> <C> <C> <C> <C> <C>
Cost/Valuation
At beginning of year 185.4 52.9 3.2 20.8 108.5
Purchased 21.0 8.7 0.2 -- 12.1
Transfer from subsidiary 2.7 1.4 -- -- 1.3
Business disposals (10.2) (1.5) (0.1) (1.2) (7.4)
Disposals (6.7) (0.4) -- -- (6.3)
Transfer to subsidiaries (43.7) (13.1) -- -- (30.6)
Reclassifications -- 19.8 (0.1) (19.6) (0.1)
----- ----- ---- ----- -----
At end of year 148.5 67.8 3.2 -- 77.5
----- ----- ---- ----- -----
Depreciation
At beginning of year 67.7 5.2 1.1 -- 61.4
Charge for the year 10.2 1.2 0.5 -- 8.5
Transfer from subsidiary 0.4 0.1 -- -- 0.3
Business disposals (4.6) (0.4) -- -- (4.2)
Disposals (6.0) -- -- -- (6.0)
Transfer to subsidiaries (20.5) (1.7) -- -- (18.8)
Reclassifications -- 0.2 (0.1) -- (0.1)
----- ----- ---- ----- -----
At end of year 47.2 4.6 1.5 -- 41.1
----- ----- ---- ----- -----
Net book value at 31st March 101.3 63.2 1.7 -- 36.4
1994 ----- ----- ---- ----- -----
Net book value at 31st March
1993 117.7 47.7 2.1 20.8 47.1
----- ----- ---- ----- -----
Historical cost at 31st March
1994 123.0 42.5 3.0 -- 77.5
Accumulated historical depre-
ciation 48.6 6.1 1.4 -- 41.1
----- ----- ---- ----- -----
Net historial cost at 31st
March 1994 74.4 36.4 1.6 -- 36.4
----- ----- ---- ----- -----
The net book value of fixed assets includes (Pounds) nil (1993 (Pounds) 0.4
million) in respect of assets held under finance leases. Freehold land and
buildings of (Pounds) 46.5 million included above are not depreciated.
13(c) Asset revaluations
--------------------------------------------------------------------------------
The property assets shown below were valued by independent professional valuers
in the years shown on the basis of open market value for existing use or
depreciated replacement cost whichever is considered the more appropriate basis
of valuation. Assets valued at depreciated replacement cost amounted to (Pounds)
49.5 million in the group and (Pounds) 14.7 million in the company (1993
(Pounds) 54.3 million and (Pounds) 24.1 million respectively).
<CAPTION>
Group Parent Company
------------------- -------------------
Freehold Freehold
land & Short land & Short
buildings leasehold buildings leasehold
(Pounds) (Pounds) (Pounds) (Pounds)
million million million million
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year of valuation
1983 15.7 -- 7.6 --
1989 71.7 0.8 37.5 0.8
1992 1.6 -- -- --
1993 2.2 -- -- --
</TABLE>
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
14. Fixed assets--investments
<TABLE>
<CAPTION>
(Pounds)
14(a) Group million
--------------------------------------------------------
<S> <C>
Share of net assets of associated undertakings
Share of net assets of associated undertakings
At beginning of year 1.1
Profits retained for the year --
At 31st March 1994 1.1
---
</TABLE>
The cost of investment in associated undertakings amounted to (Pounds)1.0
million (1993 (Pounds)1.0 million).
<TABLE>
<CAPTION>
Percentage
holding of
Issued ordinary Principal
share share operating
capital Currency capital country
Associated
undertakings 000 %
<S> <C> <C> <C> <C>
Arora-Matthey Limited 9,960 Rupee 40 India
Matthey Rustenburg Re-
finers (Pty) Limited 1,360 Rand 49 S.Africa
</TABLE>
None of the associated undertakings had any issued loan capital. The principal
operating country is also the country of incorporation for each associated
undertaking.
<TABLE>
<CAPTION>
Equity
Total loans Investments
(Pounds) (Pounds) (Pounds)
14(b) Parent Company million million million
------------------------------------------------------
<S> <C> <C> <C>
Subsidiary undertakings
cost
At 31st March 1993 22.0 4.2 17.8
Movement in the year 1.5 1.5 --
---- --- ----
At 31st March 1994 23.5 5.7 17.8
---- --- ----
</TABLE>
The principal subsidiary undertakings are shown on page 59.
<TABLE>
<CAPTION>
Group Parent Company
----------------- -----------------
1994 1993 1994 1993
(Pounds) (Pounds) (Pounds) (Pounds)
15. Stocks million million million million
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Raw materials and consumables 20.6 17.2 4.6 6.2
Work in progress
Precious metals 88.0 104.7 74.7 100.5
Other 11.2 11.9 3.2 5.1
Finished goods and goods for resale 37.1 36.5 4.8 12.2
----- ----- ---- -----
Total stocks 156.9 170.3 87.3 124.0
----- ----- ---- -----
</TABLE>
The group also holds customers' materials in the process of refining and
fabrication and for other reasons.
Parent Company precious metals includes net metal lent to subsidiary
undertakings.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
Group Parent Company
--------------------------------- ---------------------------------
1994 1993 1994 1993
(Pounds) million (Pounds) million (Pounds) million (Pounds) million
<S> <C> <C> <C> <C>
16. Debtors
Debtors: due within one year
Trade debtors 136.2 119.2 29.4 38.7
Amounts owed by subsidiary
undertakings -- -- 251.8 229.5
Amounts owed by associated
undertakings 0.1 0.1 0.1 0.1
Other debtors 18.9 14.6 10.2 7.1
Prepayments and accrued income 13.1 19.4 4.7 12.7
----- ----- ----- -----
168.3 153.3 296.2 288.1
----- ----- ----- -----
Debtors: due after one year
Prepaid pensions 36.6 28.7 36.6 28.7
Amounts owed by subsidiary
undertakings -- -- 71.0 26.6
Other debtors 1.0 1.7 -- --
----- ----- ----- -----
37.6 30.4 107.6 55.3
----- ----- ----- -----
<CAPTION>
Group Parent Company
--------------------------------- ---------------------------------
1994 1993 1994 1993
(Pounds) million (Pounds) million (Pounds) million (Pounds) million
<S> <C> <C> <C> <C>
17. Borrowings
Borrowings falling due after more than one year
Bank and other loans repayable by instalments
After five years - money 8.6 5.8 -- --
From two to five years - money 3.6 2.5 -- --
From one to two years - money 1.2 0.5 -- --
Bank and other loans repayable otherwise
than by instalments
After five years - money 5.8 5.7 -- --
From two to five years - money 28.2 42.4 28.2 42.4
From two to five years - metal -- 3.6 -- 3.6
From one to two years - money 13.8 9.9 13.7 9.9
---- ----- ---- -----
Borrowings falling due after more than
one year 61.2 70.4 41.9 55.9
---- ---- ---- -----
Borrowings falling due within one year
8.5% Mortgage Debenture Stock 1985/95 -- 4.5 -- 4.5
Bank and other loans (unsecured)
Money 52.3 50.7 28.9 44.4
Metal 17.5 21.4 11.1 20.6
----- ----- ---- -----
Borrowings falling due within one year 69.8 76.6 40.0 69.5
----- ----- ---- -----
Total borrowings 131.0 147.0 81.9 125.4
----- ----- ---- -----
Comprising
Money 113.5 122.0 70.8 101.2
Metal 17.5 25.0 11.1 24.2
----- ----- ----- -----
131.0 147.0 81.9 125.4
Less cash and deposits 37.4 31.4 9.5 1.3
----- ----- ----- -----
Net borrowings 93.6 115.6 72.4 124.1
----- ----- ----- -----
</TABLE>
Bank and other loans include (Pounds)10.8 million (1993 (Pounds)5.2 million)
secured on the assets of a subsidiary undertaking.
The loans are denominated in various currencies and bear interest at commercial
rates.
The aggregate amount of loans which are repayable by instalments is
(Pounds)13.8 million (1993 (Pounds)9.4 million).
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
Group Parent Company
----------------- -----------------
1994 1993 1994 1993
(Pounds) (Pounds) (Pounds) (Pounds)
18. Other creditors million million million million
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amounts falling due within one year
Trade creditors 71.5 69.8 17.1 22.4
Amounts owed to subsidiary undertakings -- -- 42.3 26.8
Amounts owed to associated undertakings 0.2 0.2 0.2 0.2
Current corporation tax 19.0 16.4 7.2 6.8
Other taxes and social security costs 3.4 3.7 0.6 0.7
Other creditors 8.7 8.3 3.9 4.0
Accruals and deferred income 46.2 46.7 16.6 17.0
Obligations under finance leases 0.4 1.0 0.4 --
Dividends 15.3 13.2 15.3 13.2
----- ----- ----- ----
Total other creditors falling due within
one year 164.7 159.3 103.6 91.1
----- ----- ----- ----
Other creditors falling due after more
than one year 3.9 3.6 -- --
----- ----- ----- ----
</TABLE>
19. Provisions for liabilities and charges
19(a) Group
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Provisions
for loss
on
Rationalisation Retirement Other business Deferred
Total provisions benefits provisions disposal taxation
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million million
<S> <C> <C> <C> <C> <C> <C>
At beginning of year 43.2 4.5 17.2 13.6 -- 7.9
Exchange adjustments 0.4 0.1 0.2 0.1 -- --
Utilised (7.9) (4.6) (2.0) (1.3) -- --
Charge for year 19.4 5.0 3.8 1.9 9.0 (0.3)
---- ---- ---- ---- --- ----
Other movements (0.6) 1.8 -- (0.3) -- (2.1)
---- ---- ---- ---- --- ----
Total at end of year 54.5 6.8 19.2 14.0 9.0 5.5
---- ---- ---- ---- --- ----
19(b) Parent Company
--------------------------------------------------------------------------------
<CAPTION>
Provisions
for loss
on
Rationalisation Retirement Other business Deferred
Total provisions benefits provisions disposal taxation
(Pounds) (Pounds) (Pounds) (Pounds) (Pounds) (Pounds)
million million million million million million
<S> <C> <C> <C> <C> <C> <C>
At beginning of year 10.8 1.6 -- 6.0 -- 3.2
Utilised (1.9) (1.3) -- (0.6) -- --
Charge for year 0.2 -- -- -- -- 0.2
---- ---- ---- ---- --- ----
TOTAL AT END OF YEAR 9.1 0.3 -- 5.4 -- 3.4
---- ---- ---- ---- --- ----
</TABLE>
For details of deferred taxation see note 20 on page 55.
<PAGE>
Notes on the Accounts
for the year ended 31st March 1994
<TABLE>
<CAPTION>
Group Parent Company
1994 1993 1994 1993
Deferred taxation (Pounds) Million (Pounds) Million (Pounds) Million (Pounds) Million
Deferred taxation is provided in respect of:
<S> <C> <C> <C> <C>
Timing differences on fixed assets 3.5 3.6 3.5 3.6
Timing differences on stock 0.4 2.0 (0.1) (0.4)
Other timing differences 1.6 2.3 - -
----- ----- ----- -----
Total provision for deferred taxation 5.5 7.9 3.4 3.2
----- ----- ----- -----
Deferred taxation not included in the balance sheet:
Taxation on property revaluation surplus 3.9 3.6 0.6 0.4
Advance corporation tax not utilised (21.9) (19.3) (21.9) (19.3)
</TABLE>
No account has been taken of taxation which would be payable if the retained
profits of overseas subsidiary and associated undertakings were distributed.
<TABLE>
<CAPTION>
21. Called up share capital 1994 1993
Alloted Alloted
issued issued
Authorised fully paid Authorised fully paid
(Pounds) million (Pounds) million (Pounds) million (Pounds) million
<S> <C> <C> <C> <C>
3.5% Cumulative preference shares of (Pounds) 1 each 0.4 0.3 0.4 0.3
8% Convertible cumulative preference shares of (Pounds)1 each 0.3 0.3 0.3 0.3
Ordinary shares of (Pounds) 1 each 219.7 190.9 219.7 185.2
---------- ---------- ---------- ----------
Total called up share capital 220.4 191.5 220.4 185.8
---------- ---------- ---------- ----------
</TABLE>
The number of ordinary shares in issue at 31st March 1994 was 190,894,729 (1993
185,214,360) and the number of 8% convertible cumulative preference shares in
issue at 31st March 1994 was 276,250 (1993 293,135). During the year ended 31st
March 1994 holders of 16,885 (1993 41,953) 8% convertible cumulative preference
shares converted their shares into fully paid ordinary shares. As a consequence,
(Pounds) 13,170 (1993 (Pounds) 32,723) of the share premium account was
applied in paying up the ordinary shares at par.
On 23rd July 1993 the company issued 4,173,136 fully paid ordinary shares in
respect of the enhanced scrip dividend approved by shareholders at the company's
AGM on 13th July 1993. As a consequence (Pounds) 4,173,136 of the share premium
account was applied in paying up the ordinary shares at par.
Each 8% convertible cumulative preference share can be converted into 1.78
ordinary shares at any time up until 1st October 1999. The terms of the
conversion provide that, by the capitalisation of the share premium account or
reserves or undistributed profit, 0.78 of an ordinary share shall be issued
fully paid for each preference share converted into an ordinary share.
During the year ended 31st March 1994, senior executives exercised their options
to subscribe for a total of 1,476,640 ordinary shares at prices from 186.59
pence per share to 455 pence per share.
Since 31st March 1994 six executives have exercised options to subscribe for
90,373 ordinary shares and the holders of 6,646% convertible cumulative
preference shares have converted their shares into fully paid ordinary shares.
As a consequence, a further (Pounds) 5,184 of the share premium account has
been applied in paying up the ordinary shares at par. Therefore, as at
31st May 1994 after completing these conversions and allotments there were
190,996,932 ordinary shares and 269,604 8% convertible cumulative preference
shares in issue.
Certain directors and senior executives have options under the Executive Share
Option Scheme and the US Executive Stock Option Plan giving them the right to
subscribe for a total as at 31st May 1994 of 2,073,536 ordinary shares,
exercisable at various times up to the year 2003 at prices from 125.06 pence per
share to 489 pence per share.
<PAGE>
Notes on the Accounts
---------------------
for the year ended 31st March 1994
22. Reserves
22(a) Group
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Share Associated Profit &
premium Revaluation undertakings' loss
account reserve reserves account
(Pounds) million (Pounds) million (Pounds) million (Pounds) million
<S> <S> <C> <C> <C>
At beginning of year 4.5 49.4 0.1 92.8
Exchange adjustments -- (0.4) -- 0.8
Premium on shares issued 2.6 -- -- --
Retained profit for the period -- -- -- 22.9
Goodwill on purchase of minority shares -- -- -- (1.1)
Goodwill charged on disposal -- -- -- 0.1
Capitalised in respect of enhanced scrip dividend (4.2) -- -- --
Cash alternative value of enhanced scrip dividend for 1993 -- -- -- 12.6
Transfers and other movements -- (3.7) -- 3.7
------- ------- ------- -------
Reserves at end of year 2.9 45.3 0.1 131.8
------- ------- ------- -------
</TABLE>
The cumulative amount of goodwill charged against profit and loss account at
31st March 1994, net of goodwill relating to disposals, was (Pounds)50.5 million
(1993, (Pounds)49.6 million).
Currency translation differences include a (Pounds)0.6 million exchange loss on
foreign currency borrowings used to hedge overseas net assets.
<TABLE>
<CAPTION>
22(b) Parent Company
--------------------------------------------------------------------------------------------------------------------------------
Share Associated Profit &
premium Revaluation undertakings' loss
account reserve reserves account
(Pounds) million (Pounds) million (Pounds) million (Pounds) million
<S> <S> <C> <C> <C>
At beginning of year 4.5 31.3 -- 161.5
Premium on shares issued 2.6 -- -- --
Retained profit for the period -- -- -- 32.2
Capitalised in respect of enhanced scrip dividend (4.2) -- -- --
Cash alternative value of enhanced scrip dividend for 1993 -- -- -- 12.6
Transfers and other movements -- (4.4) -- 4.5
------- ------- ------- -------
Reserves at end of year 2.9 26.9 -- 210.8
------- ------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
Group Parent Company
------------------------- --------------------------
23. Commitments, guarantees and 1994 1993 1994 1993
contingent liabilities (Pounds) million (Pounds) million (Pounds) million (Pounds) million
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Future capital expenditure
Contracted 2.0 13.9 0.9 8.2
Authorised but not contracted 7.6 23.8 5.8 8.4
Annual commitments under operating leases
Leases of land and buildings terminating
Within one year 0.7 0.6 -- 0.1
In one to five years 1.7 1.9 -- 1.4
Over five years 3.1 2.1 2.4 1.2
Other leases terminating
Within one year 0.7 0.9 0.5 0.5
In one to five years 1.8 1.8 1.1 1.0
</TABLE>
<PAGE>
Notes on the Accounts
---------------------
for the year ended 31st March 1994
23. continued
--------------------------------------------------------------------------------
Guarantees
Bank overdrafts, loans, metal accounts and other obligations of certain
subsidiary undertakings due to third parties amounting to (Pounds)22.9 million
(1993, (Pounds)12.9 million) are guaranteed by the Parent Company and certain
subsidiary undertakings.
Contingent liabilities
The company is resisting a claim which has arisen from proceedings
following the Brink's-Mat bullion theft at Heathrow Airport in 1983.
In August 1993, General Motors Corporation (GM) issued proceedings against
Johnson Matthey in the United States alleging breach of contract and various
other matters. Johnson Matthey vigorously rejects all GM's allegations which it
does not believe have any substance.
The directors are of the opinion, relying on legal advice, that these cases
should not result in material losses.
24. Notes to the cash flow statement
<TABLE>
<CAPTION>
24(a) Reconciliation of operating profit to net cash inflow from 1994 1993
operating activities (Pounds) million (Pounds) million
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating profit 81.7 71.6
Depreciation charges 30.7 26.5
Loss/(profit) on sale of tangible fixed assets 0.2 (0.2)
Share of profits of associated undertakings (2.0) (2.3)
(Increase)/decrease in stocks (7.1) 4.3
(Increase)/decrease in debtors (26.4) 5.0
Decrease/(increase) in creditors and provisions 1.8 (39.7)
------ ------
Net cash inflow from continuing operating activities 78.9 65.2
Net cash outflow in respect of rationalisation costs (4.6) (18.9)
------ ------
Net cash inflow from operating activities 74.3 46.3
------ ------
</TABLE>
<TABLE>
<CAPTION>
Cash at bank Bank
Total and in hand overdraft
a24(b) Analysis of changes in cash and cash equivalents (Pounds) million (Pounds) million (Pounds) million
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at 31st March 1992 78.0 90.1 (12.1)
Net cash (outflow)/inflow before adjustments for the effect of
foreign exchange rate changes (56.5) (61.0) 4.5
Effect of foreign exchange rate changes 2.3 2.3 --
------ ------ ------
Balance at 31st March 1993 23.8 31.4 (7.6)
Net cash (outflow)/inflow before adjustments for the effect of
foreign exchange rate changes (7.8) 5.9 (13.7)
Effect of foreign exchange rate changes (0.2) 0.1 (0.3)
------ ------ ------
Balance at 31st March 1994 15.8 37.4 (21.6)
------ ------ ------
</TABLE>
<PAGE>
Notes on the Accounts
---------------------
for the year ended 31st March 1994
<TABLE>
<CAPTION>
Share Share Money Metal Finance lease
capital premium borrowings borrowings obligations
24(c) Analysis of changes in financing (Pounds) million (Pounds) million (Pounds) million (Pounds) million (Pounds) million
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at 31st March 1992 185.3 3.2 87.9 27.4 3.3
Cash inflows on new issues 0.5 1.3 -- -- 0
Reduction in borrowings and lease obligations -- -- (3.9) (5.4) (2.5)
Effect of foreign exchange rate changes -- -- 30.4 3.0 0.2
-------- -------- -------- -------- --------
Balance at 31st March 1993 185.8 4.5 114.4 25.0 1.0
Cash inflows on new issues 1.5 2.6 -- -- --
Scrip issue in lieu of dividend 4.2 (4.2) -- -- --
Reduction in borrowings and lease obligations -- -- (23.2) (7.6) (0.6)
Effect of foreign exchange rate changes -- -- 0.6 0.1 --
-------- -------- -------- -------- --------
Balance at 31st March 1994 191.5 2.9 91.8 17.5 0.4
-------- -------- -------- -------- --------
</TABLE>
25. Analysis of acquisitions and disposals
--------------------------------------------------------------------------------
Svenska Emissionsteknik AB and PT Johnson Matthey Indonesia
During the year the group purchased additional shares in Svenska Emissionsteknik
AB for (Pounds)1.0 million, increasing the group's percentage holding of
ordinary share capital from 62% to 83%. A further (Pounds)0.1 million was spent
in respect of start up costs of a new joint venture, PT Johnson Matthey
Indonesia, in which the company has a 67% interest.
UK and Irish Jewellery business
During the year the group sold its jewellery business in the United Kingdom and
Ireland to Cookson Group plc.
<TABLE>
<CAPTION>
(Pounds) million
<S> <C>
Tangible fixed assets 5.7
Stocks 2.7
Debtors and prepayments 7.0
Bank overdrafts (0.3)
Creditors (1.2)
--------
Net assets disposed of 13.9
Profit on disposal 2.3
Goodwill reinstated 0.1
--------
16.3
Decrease in borrowed metal 18.9
Bank overdrafts disposed of 0.3
Costs incurred on disposal (0.2)
--------
35.3
--------
Satisfied by
Cash 16.4
Decrease in borrowed metal 18.9
--------
35.3
--------
</TABLE>
The profit of the UK and Irish Jewellery business for the period up to the date
of disposal was (Pounds)1.1 million (1993 (Pounds)0.8 million for the full
year), generating (Pounds)1.7 million of the group's net cash inflow from
operating activities. (Pounds)0.1 million was paid in respect of returns on
investments and servicing of finance, (Pounds)0.1 million in respect of taxation
and (Pounds)0.5 million in respect of investing activities. Borrowed metal also
increased by (Pounds)5.1 million.
<PAGE>
Principal Subsidiary and Associated Undertakings
------------------------------------------------
Country of
Europe incorporation
------------------------------------------------------
SA Johnson Matthey NV Belgium
Johnson Matthey SA France
Matthey Beyrand & Cie SA (80%) France
Johnson Matthey BV The Netherlands
Johnson Matthey SpA Italy
Svenska Emissionsteknik AB (83%) Sweden
Johnson Matthey &
Brandenberger AG Switzerland
Johnson Matthey GmbH Germany
Matthey Beyrand Druck
GmbH (80%) Germany
North America
------------------------------------------------------
Johnson Matthey Investments Inc. USA
Johnson Matthey Inc. USA
Johnson Matthey Catalog
Company Inc. USA
Johnson Matthey Electronics Inc. USA
The Alta Group Inc. USA
Johnson Matthey Limited Canada
Crystar Research Inc. Canada
Country of
Australia and New Zealand incorporation
------------------------------------------------------
Johnson Matthey Limited Australia
Johnson Matthey (Aust.)
Limited Australia
Johnson Matthey Colour
(Australia) Pty Limited Australia
Johnson Matthey (New Zealand)
Limited New Zealand
Asia
------------------------------------------------------
Johnson Matthey Hong Kong
Limited Hong Kong
*Arora-Matthey Limited (40%) India
Johnson Matthey Japan Limited Japan
Johnson Matthey (Singapore)
Pte Limited Singapore
Johnson Matthey Korea Limited South Korea
PT Johnson Matthey (67%) Indonesia
South Africa
------------------------------------------------------
Johnson Matthey (Pty) Limited
*Matthey Rustenburg Refiners
(Pty) Limited (49%)
Except where otherwise stated, all companies are wholly owned.
*Associated undertakings (see note 14(a) on page 52).
All the subsidiary and associated undertakings are involved in the principal
activities of the Group.
All the above undertakings operate principally in their country of
incorporation.
Financial Calendar
------------------
1994
---------------------------------------------------------------
1st July Final ordinary dividend record date
12th July 103rd Annual General Meeting
1st August Payment of final dividend subject to
declaration by the Annual General Meeting
1st October Payment of dividends on preference shares
November Announcement of results for six months ending
30th September 1994
1995
---------------------------------------------------------------
1st April Payment of dividends on preference shares
June Announcement of results for year ending 31st
March 1995
<PAGE>
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given to the ordinary shareholders of Johnson Matthey Public
Limited Company that the one hundred and third Annual General Meeting of the
Company will be held at the Sainsbury Wing Lecture Theatre, The National
Gallery, Trafalgar Square, London WC2N 5DN on Tuesday 12th July 1994 at 12.00
noon for the following purposes:
1. To receive and adopt the accounts of the Company for the year ended 31st
March 1994 and the reports of the directors and auditors thereon.
2. To declare a final dividend of 8.0p pence per share on the ordinary shares of
the Company in respect of the year ended 31st March 1994.
3. To re-elect the undermentioned directors:
D G Titcombe
H M P Miles OBE
J A Stevenson
4. To reappoint KPMG Peat Marwick as auditors and authorise the directors to fix
their remuneration.
5. To consider the following resolution which will be proposed as an ordinary
resolution:
"THAT
in accordance with Article 9(C)(i) the Prescribed Period as defined in
Article 9(B)(iii)(a) be from the date of the passing of this resolution up to
and including 12th July 1999 and that the Section 80 amount as defined by
Article 9(B)(iv) be (pound)28,845,411."
6. To consider the following resolution which will be proposed as a special
resolution:
"THAT
subject to the passing of the Resolution in 5. above and pursuant to the
authority therein contained and in accordance with Article 9(C)(ii) the
Prescribed Period as defined in Article 9(B)(iii)(b) be from the date of the
passing of this resolution until the conclusion of the next Annual
General Meeting and that the Section 89 amount as defined in Article 9(B)(v)
be (pound)9,549,847 (being 5 per cent of the issued ordinary share capital of
the Company at 31st May 1994)."
The word "Article" in the above resolutions means the relevant paragraph of the
Articles of Association of the Company.
By order of the Board 2-4 Cockspur Street
1 G Thorburn, Secretary Trafalgar Square
20th June 1994 London SW1Y5BQ
<PAGE>
Notice of Annual General Meeting
--------------------------------
Notes
1. This notice is for the information only of the holders of preference shares.
A member entitled to attend and vote at this meeting is entitled to appoint a
proxy or proxies to attend and, on a poll, vote instead of him. A proxy need
not be a member of the company. A proxy card, to be valid, must be lodged
not later than 12.00 Noon on Sunday 10th July 1994 at the offices of the
company's Registrars, Barclays Registrars, Bourne House, 34 Beckenham Road,
Beckenham, Kent BR3 4TU.
2. The register of interests of the directors and their families in the shares
of the Company, required to be kept by the company in accordance with Section
325 of the Companies Act 1985, will be available for inspection by members
at the Annual General Meeting.
3. Copies of directors' service contracts (unless expiring or determinable by
the Company without payment of compensation within one year) will be
available for inspection by members at the offices of Taylor Joynson Garrett,
Carmelite, 50 Victoria Embankment, Blackfriars, London EC4Y 0DX during normal
business hours on any working day from the date of this notice and will, on
the date of the Annual General meeting be available for inspection at the
Sainsbury Wing Lecture Theatre, The National Gallery from 11.45 a.m. until
the conclusion of the meeting.
--------------------------------------------------------------------------------
Auditors Merchant Bankers
KPMG Peat Marwick Baring Brothers & Co.
1 Puddle Dock Limited
London 8 Bishopsgate
EC4V 3PD London
EC2N 4AE
Lawyers
Herbert Smith Taylor Joynson Garrett
Exchange House Carmelite
Primrose Street 50 Victoria Embankment
London Blackfriars
EC2A 2HS London
EC4Y 0DX
Brokers
UBS Barclays de Zoete Wedd
100 Liverpool Street Services Ltd.
London Ebbgate House
EC2M 2RH 2 Swan Lane
London EC4R 3TS
Registrars
Barclays Registrars
Bourne House
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 081-650-4866
Johnson Matthey
---------------
Head Office Registered in England
Johnson Matthey Number 33774
Public Limited Company
2-4 Cockspur Street Registered Office
Trafalgar Square 78 Hatton Garden
London SW1Y 5BQ London EC1N 8JP
Telephone: 071-269-8400
Johnson Matthey is grateful to Daimler-Benz North America Corporation and the
Saudi British Bank for providing illustrations for use in this publication.
<PAGE>
Exhibit (h)
Minutes of a meeting of a sub-committee of the Board of Directors of Johnson
Matthey Public Limited Company held at 2-4 Cockspur Street, Trafalgar Square,
London SW1Y 5BQ on Friday 18th August 1995
--------------------------------------------------------------------------------
PRESENT: Messrs J N Sheldrick and I G Thorburn (by telephone)
1. Mr J N Sheldrick was Appointed Chairman of the Meeting. It was noted that
the Committee had been appointed at a meeting of the Board held on 7
August, 1995 and that, in accordance with the Committee's constitution, at
least two directors were present.
2. The Chairman explained that the meeting had been convened to approve the
delegation of signatory and other authority on behalf of the Company to
each of D McL Miller and J S Leopold in connection with the Tender Offer
and the Acquisition.
3. Current proofs of the following documents were produced at the meeting:
(a) the Tender Offer document to be issued (and filed on Schedule 14D-1
with the Securities and Exchange Commission ("SEC") and the National
Association of Securities Dealers, Inc. ("NASD")) in relation to the
Acquisition;
(b) a dealer manager agreement to be entered into by the Company, ACI
Acquisition Corporation ("ACIAC") and Dillion, Read & Co., Inc.;
(c) an information agent agreement to be entered into by the Company,
ACIAC and Georgeson & Company Inc.;
(d) a depository agreement to be entered into by the Company, ACIAC and
Chemical Mellon Shareholder Services;
(e) a premerger notification and report form to be filed with the
Antitrust Division of the Department of Justice and the Federal Trade
Commission under the Hart-Scott-Rodino Antitrust Improvements Act
1976;
(f) a voluntary notice to be filed with the Committee on Foreign
Investment in the United States pursuant to Section 721 of the Defense
Production Act of 1950, as amended, and the Department of Treasury's
Regulations Pertaining to Mergers, Acquisitions and Takeovers by
Foreign Persons;
(g) a form 80B to be filed by the Company and ACIAC in the State of
Minnesota; and
(h) a Tender Offer statement on Schedule 14D-9 (together with all
amendments and supplements thereto) to be filed with the SEC and the
NASD.
4. IT WAS RESOLVED that each of D McL Miller and J S Leopold be and are hereby
severally authorised to sign each of the above documents in its final form
of behalf of the Company and to take such further action as they shall, in
their absolute discretion, deem necessary or desirable in relation to the
Tender Offer and the Acquisition.
<PAGE>
2
5. It was noted that terms defined in the minutes of the meeting of the
Committee held on 14 August should have the same meaning when referred to
in the minutes of the current meeting.
6. There being no further business the meeting closed.
/s/ John Sheldrick 18 August 1995
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Chairman Date
